LLQP SEGREGATED FUNDS UPDATED
COMPLETE QUESTIONS AND ANSWERS
VERIFIED PREPARATION RESOURCE
●● What is investing?
Answer: Using savings to purchase assets to earn a return.
●● What is principal (capital)?
Answer: Original invested amount.
●● What is return?
Answer: Profit or loss on an investment.
●● What is rate of return?
Answer: Return expressed as a percentage.
●● What is compound interest?
Answer: Interest earned on principal plus prior interest.
●● What is the most powerful factor in compounding?
Answer: Time.
, ●● What happens to compounding with withdrawals?
Answer: Withdrawals reduce compounding.
●● What are the types of investment returns?
Answer: Positive (gain), Neutral (break-even), Negative (loss).
●● What is nominal return?
Answer: Stated rate of return.
●● What is real return?
Answer: Nominal return minus inflation.
●● What is the risk-return spectrum?
Answer: Low risk equals low return; high risk equals high potential
return.
●● What are the main asset classes?
Answer: Cash, Fixed Income (Bonds), Equities (Stocks), Real Estate,
Commodities.
●● What is diversification?
Answer: Spreading risk across assets, sectors, and geography.
COMPLETE QUESTIONS AND ANSWERS
VERIFIED PREPARATION RESOURCE
●● What is investing?
Answer: Using savings to purchase assets to earn a return.
●● What is principal (capital)?
Answer: Original invested amount.
●● What is return?
Answer: Profit or loss on an investment.
●● What is rate of return?
Answer: Return expressed as a percentage.
●● What is compound interest?
Answer: Interest earned on principal plus prior interest.
●● What is the most powerful factor in compounding?
Answer: Time.
, ●● What happens to compounding with withdrawals?
Answer: Withdrawals reduce compounding.
●● What are the types of investment returns?
Answer: Positive (gain), Neutral (break-even), Negative (loss).
●● What is nominal return?
Answer: Stated rate of return.
●● What is real return?
Answer: Nominal return minus inflation.
●● What is the risk-return spectrum?
Answer: Low risk equals low return; high risk equals high potential
return.
●● What are the main asset classes?
Answer: Cash, Fixed Income (Bonds), Equities (Stocks), Real Estate,
Commodities.
●● What is diversification?
Answer: Spreading risk across assets, sectors, and geography.