Refer to Theory in Practice 2.1 relating to the embedded value of Manulife Financial’s common shares.

Required
a. Prepare an income statement for Manulife on an embedded value basis for 2011. Use a format similar to the format used in Table 2.3.
b. Serafeim (2011) reported lower information asymmetry for insurance companies that report embedded value, compared with companies that do not report this information. However, this lower information asymmetry held only for firms that employed an outside auditor to review the calculations and was particularly strong for firms that also belonged to the CFO forum. Why would information asymmetry be lower for such firms?
c. Suggest reasons why Manulife’s common share market value ($ 11.20) is so much less than its embedded value per share ($ 20.02).