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6. Hedge funds and financial leverage Compared to mutual funds, hedge funds usually invest in a types of investments. Suppose that Thompson Hedge Fund obtains and invests $3 of borrowed funds for every $1 of equity invested. In other words, it can invest $4 of assets for each $1 of equity. Also suppose that Thompson can achieve a 20% return on assets (ROA). Given this ROA, the return on Thompson's equity investment is %. Suppose that Thompson Hedge Fund obtains and invests $3 of borrowed funds for every $1 of equity invested. In other words, it can invest $4 of assets for each $1 of equity. However, suppose that Thompson suffers a 20% loss, or a -20% return on assets (ROA). Given this ROA, the return on Thompson's equity investment is %. 6. Hedge funds and financial leverage Compared to mutual funds, hedge funds usually invest in a types of investments. Suppose that Thompson Hedge Fund obtains and invests $3 more Wed funds for every $1 of equity invested. In other words, it can invest $4 of assets for each $1 of equity. Also suppose that Thompson ca fewer e a 20% return on assets (ROA). Given this ROA, the return on Thompson's equity investment is %. Suppose that Thompson Hedge Fund obtains and invests $3 of borrowed funds for every $1 of equity invested. In other words, it can invest $4 of assets for each $1 of equity. However, suppose that Thompson suffers a 20% loss, or a -20% return on assets (ROA). Given this ROA, the return on Thompson's equity investment is %

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