Answer:
a. Based on the scenario given, Ahmed can consider using the Mudarabah financial instrument, which is a profit-sharing arrangement between the bank (the investor) and Ahmed (the entrepreneur). In this case, the bank will provide funds for the equipment manufacturer upfront, and Ahmed will be responsible for managing the project and generating profits from it. The profits will then be shared between Ahmed and the bank based on a pre-agreed ratio.
b. One of the risks associated with Mudarabah financing is the risk of loss, where Ahmed may not be able to generate sufficient profits to cover the bank's investment. To mitigate this risk, Ahmed can consider providing a personal guarantee or collateral to secure the financing, and also ensure that the equipment manufacturer is reputable and has a track record of delivering quality products within the agreed timeframe. The bank may also conduct due diligence to assess the viability of the project and Ahmed's ability to manage it effectively.
Step-by-step explanation: