mock concepts and questions concepts, investment, understand, wrt

redskins44

I have few doubts. I have seen these concepts on mocks or sample exams. If someone can please help me understand these.
1. What is the role of dividend payments in case of ETFs and Open end mutual funds ? Are dividends reinvested to buy more shares or, they are given out to share holders ?
2. What is meant “deteriorating fundamentals” wrt to investment grade bonds and how does it effect credit risk ?
3. What is recovery rate and credit risk of a debenture compared to a mortgage based bond?
(higher/lower) ?
Thanks a lot in advance !

himanshumh

Thanks Dreary you are Great !
Quick follow up questions –
1. Is there an advantage of dividend payment for ETFs compared to open ends or vice versa?
3. Both should be bad. Default rates on unsecured loans are much higher than secured loans but mock feedback says p(default) is equal ?? any thoughts..

draz

1. What is the role of dividend payments in case of ETFs and Open end mutual funds ? Are dividends reinvested to buy more shares or, they are given out to share holders ?
reinvested or pay for internal expenses, I think.
2. What is meant “deteriorating fundamentals” wrt to investment grade bonds and how does it effect credit risk ?
nothing specific, other than bad financials affecting its credit, bad Cr, bad quick ratio, etc?
3. What is recovery rate and credit risk of a debenture compared to a mortgage based bond?
(higher/lower) ?
Not sure, both are bad.