Question 6 1 pts Which of the following statements is CORRECT? One drawback of EVA as a performance measure is that it mistakenly assumes that equity capital is free. If a firm reports positive net income, its EVA must also be positive. One way to increase EVA is to achieve the same level of operating income but with more total invested capital obtained at a higher cost of capital Actions that increase reported net income will always increase cash flow. One way to increase EVA is to generate the same level of operating income but with less total invested capital. D Question 30 1 pts Which of the following statements is CORRECT? Hedge funds are legal in Europe and Asia, but they are not permitted to operate in the United States. Hedge funds have more in common with commercial banks than with any other type of financial institution. Hedge funds are not as highly regulated as most other types of financial institutions. The justification for this light regulation is that only "sophisticated" investors (ie, those with high net worths and high incomes) are permitted to invest in these funds, and these investors supposedly can do any necessary "due diligence on their own rather than have it done by the SEC or some other regulator. Hedge funds have more in common with investment banks than with any other type of financial institution. Hedge funds are legal in the United States, but they are not permitted to operate in Europe or Asia. Question 45 1 pts Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected. Old WACC-10.00% New WACC 8.00% Year 0 1 3 N Cash flows -$1,000 $410 $410 $410 $32.19 $37.00 $44.03 $38.48 $40.70