In islamic finance the rate interest must be nul, what must be the model of portfolio in this case?
It's not actually Null as you think, in theory, is its profit-and-loss sharing paradigm please refer to
http://ie.um.ac.ir/parameters/ie/filemanager/%D9%85%D9%82%D8%A7%D9%84%D8%A7%D8%AA%20%D8%A7%D9%82%D8%AA%D8%B5%D8%A7%D8%AF%DB%8C/10E.pdf
The interest in the direct loan sense is zero, but there is an implicit interest rate built into the price the intermediary buys and sells the asset for I.e a price differential. This can be used to calculate an implied interest rate.
It can be used not as a Null but as floating, linking the inflation with a gradient. Similar to inflation indexed bonds. DCF should produce the current NPV of a project, else the selection process will be incomplete and theoretical or in other terms that gain could be termed as " possible Capital Gain". However the effect will remain the same.
- Badges
- Science topic
- Similar topics
- Mathematical Sciences
- Graphs