Capital asset pricing model and pricing of Islamic financial instruments

• Main Authors: Hakim, Shabir Ahmad, Hamid, Zarinah, Mydin Meera, Ahamed Kameel
• Format: Article
• Language: English; English
• Published: King Abdulaziz University 2016
• Subjects: HG4001 Financial management. Business finance. Corporation finance.; HG4501 Stocks, investment, speculation; HJ Public Finance
• Online Access: http://irep.iium.edu.my/53401/1/JKAU%20IE%20Journal-%2029%20No1%20Jan%202016.pdf; http://irep.iium.edu.my/53401/7/53401-Capital%20asset%20pricing%20model%20and%20pricing%20of%20islamic%20financial%20instruments_SCOPUS.pdf; http://irep.iium.edu.my/53401/; http://iei.kau.edu.sa/Files/121/Files/153873_29-01-02-CAPM.pdf

The prohibitions of ribā (interest) and trading in non-ḥalāl businesses in Islam redefines investment universe assumed by Capital Asset Pricing Model (CAPM). In Islamic investment world, risk-free asset and market portfolio with non-ḥalāl constituents are irrelevant. We propose two-versions of Sharī...