Hoping for your best of health, faith and happiness.
I am pleased to introduce my book on Islamic Banking.
http://www.amazon.com/Islamic-Banking-Financial-Reporting-Perspective/dp/146107259X/ref=sr_1_1?ie=UTF8&s=books&qid=1303271851&sr=1-1
https://www.createspace.com/3593102

This book is result of 3 years teaching and course development for MBA Students in this area. I am confident this book addresses the questions generally raised by learners of course. This book is written in financial perspective (generally resources available are about Islamic commercial laws). This book contains summary of Islamic financial laws as well as financial impact generated by application of these laws. I hope this book will be used as text by teachers of finance in universities and learning centers around the world.

Regards

So on theoretical fronts even the MM theorem I has no validity. There is no mention of this caveat in their writings. They simply assumed that EBIT to be enough to cover everything and be same for both firms whereas this is not the case.

My bank is offering a ‘Mudaraba account’ which requires me to deposit money from my current account to this account. The benefits are:

1) annual profit that changes as per the assets of the bank . Thus relating the profit to the profit from the shariah compliant activity that the bank claims it earns it from. Hence not fixed like Riba.

2) I can withdraw the cash and deposit in this account just like my current account.

Please tell me if i will still be indulging in riba? Thanks

As for the skim milk and cream. When you take the cream out, the price of the skim milk actually goes down (it HAS to be less than the price of the whole milk– if it was not, then everyone would buy whole milk, separate skim milk and cream out, and make lots of money… so there is arbitrage opportunity that should not otherwise exist in a perfect market). So the price of skim milk + cream remains equal to the price of whole milk (we are of course assuming that separation costs are zero). By separating the cream out, you have made the remaining “left-over” less valuable, with total value remaining constant.

When companies add debt, the banks/debt-holders have FIRST rights to the company’s cash flows. So, it makes the risk of the equity-holders who are next in line higher, and thus the rate of return they demand higher. The higher the rate of return demanded, the lower the value of the investment. If I go further along on return/risk, I think things will get confusing. So, I hope you understand the analogy at least.

In my mind, if the cream is a desired item and therefore worth more sold as cream than as part of whole milk, then selling seperate items of cream and skimmed milk should be worth more than the value of whole milk as a single product (assuming that that skimmed milk isn’t worth any less than whole milk, of course). But the analogy is saying that it should bring the same price.

The issue that I raised is to think what determines the value of money or the purchasing power, which may be different for different people. For a richer person, a 10% increase in his grocery bills is not going to make much difference, but it will make lots for a person with a lesser income. We see gadgets becoming cheaper and grocery dearer day by day.

Apart from buying and selling treasury stocks, the Apex bank of a country may increase/decrease the interest rate in order to control the money supply. Though not entirely, inflation is largely influenced by interest.

Brother Ahmad AlFarsi, I agree with your summary. But of late the prices of gold has been fluctuating like anything, there has been a 10% variation in a period of just 3 weeks. Just a day before Eid, the price climbed 8% in a day. What do we do in that case?