
Pricing of Bai Salam
An Analytical Perspective
Bai Salam has gained prominence as an Islamic financial instrument for financing the deficit funding units across the Islamic world. This paper uses the arbitrage-free first order conditions to set boundaries on the ra's al-mal (the price paid in Bai Salam). Among the four schools of thought (Hanafi, Maliki, Shafi and Hanbali), Hanafi jurists strictly require, for a valid Salam contract, the existence of al-musallam fihi (the underlying asset of the Bai Salam contract) at the time of contract. This paper proposes that when al-musallam fihi exists at the time of contract the ra's al-mal must be equal to the current price of the underlying asset plus the holding cost so that there is no arbitrage. For cases where al-musallam fihi does not exist at the time of contract, a closed form formula for calculation of ra's- al-mal is being proposed. The formula will ensure fair pricing of Salam contracts in order to safeguard the interests of al-musallam alayhi (the seller of the underlying asset).
- ISBN 10 : OCLC:1305088373
- Judul : Pricing of Bai Salam
- Sub Judul : An Analytical Perspective
- Pengarang : Muhammad Ajmal,
- Bahasa : en
- Tahun : 2017
- Halaman : 10
- Google Book : http://books.google.co.id/books?id=ocf8zgEACAAJ&dq=intitle:bai+salam&hl=&source=gbs_api
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Ketersediaan :
Bai Salam has gained prominence as an Islamic financial instrument for financing the deficit funding units across the Islamic world.