Distinguish between price elasticity of demand and price elasticity of supply.

(i) Describe unique aspects of the insurance industry that require actuarial analysis during a merger and acquisition (M&A) transaction. (ii) List five key assumptions underlying actuarial appraisals.You are given the following company-specific information: 10 Year Treasury 2.60%% Company Beta 1.4 Market Risk Premium over 10 Y car Treasury 5.50%% % of Required Capital Financed through Debt 30% % of Required Capital Financed through Equity 70% Return on Debt 5% After Tax Investment Return on Assets 6.0% Corporate Tax Rate 35%% Assume management has asked that debt be recognized implicitly in the Risk Discount Rate (RDR). End of Year Values 2018 2019 2020 2021 (Actual) ( Projected) ( Projected) ( Projected) Statutory Book Profit 100 90 95 103 Required Capital 500 480 460 440 Free Surplus 90 110 70 Net Operating Profit After Tax (NOPAT) 49.5 58 54 52 Economic Capital 550 520 510 480 (b) (4 points) Calculate the Embedded Value (EV) as at December 31, 2018. Show all work. (c) (3 points) Explain the impact of each of the following events on the various components of Embedded Value for this company. Calculations are not required. (i) Corporate tax rate decreases (ii) A shift in the company's business to less risky traditional products (d) (3 points) Assuming a hurdle rate of 9%: (i) Calculate the risk adjusted return on capital (RAROC) and Economic Value Added (EVA) as at December 31, 2018. Determine if the company is creating value for shareholders based on these metrics