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    Question

    Which term in Islamic finance refers to the religious

    obligation requiring Muslims to donate a specific percentage of their wealth annually to charitable causes?
    A Mudarabad Correct Answer Incorrect Answer
    B Ijarah Correct Answer Incorrect Answer
    C Zakat Correct Answer Incorrect Answer
    D Musharakah Correct Answer Incorrect Answer

    Solution

    Zakat constitutes one of the Five Pillars of Islam and represents the mandatory charitable contribution that practicing Muslims must make annually. Typically calculated at 2.5% of a Muslim's accumulated wealth and investments exceeding a minimum threshold (nisab), Zakat serves to purify wealth and support those in neeThis practice fulfills both spiritual and social functions by allowing Muslims to earn divine favor while simultaneously addressing economic inequalities within society. The other terms in the options refer to different Islamic financial concepts: Mudarabah pertains to profit-sharing partnerships, Ijarah relates to leasing arrangements, and Musharakah describes joint venture structures in Islamic finance.

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