Islamic Finance – Islamic Capital Market - Sale and buy back agreements
Receivables resulting from a sale and buyback agreement have clearly been securitized, as is evident. The quantity of money that investors will be eligible to receive from the issuer is reflected in the bonds or notes issued under these two structures. This sum of money comprises of the principal as well as the non-dissociable profit margin. These assets can either be kept until they mature or sold to raise cash. Their secondary market market worth will affect the sale price. A holder will receive MYR1,050,000 in total at the maturity time, for instance, if the principal amount is MYR1,000,000 and the coupon amount is MYR50,000. They will receive a total of MYR1,030,000 if they sell their securities on the secondary market and the market worth of the principal is only MYR980,000. They will receive a total of MYR1,050,500 if the market worth is MYR1,000,500.
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