Access the 2011 annual report for Manulife Financial Corporation by going to investor relations section of the company’s website. Answer the questions below.
For each question, indicate where in the financial statements you found the answer, and/or provide a brief explanation.
(a) What is the functional currency of the parent company, and what currency is used in presenting the financial statements?
(b) What is the predominant currency of the company 9 s foreign operations, and what other currencies are functional currencies of entities within the consolidated group?
(c) What were the foreign exchange gains or losses reported in net income during the year? Are the foreign exchange gains or losses segregated between foreign transactions and foreign operations?
(d) Explain if and how the company hedges its net investments in foreign operations and how it reports exchange gains or losses on these hedges.
(e) If the reporting currency appreciates by 10% relative to the U.S. dollar in the next year, will the company likely report foreign exchange gains or foreign exchange losses in operating income?
(f) If the company had used the U.S. dollar as its presentation currency this past year, would it likely have reported exchange gains or exchange losses? Briefly explain.