A company based in the US has two subsidiaries, one in the UK (GBP) and the other in South Africa (ZAR) These subs would like to receive a nominal 0.5% (annual) rate on their surplus balances. The US HQ can borrow at a rate of 7.0625% and assume a 7-day investment/borrowing timeframe. Use all the available funds as shown below and assume 365-day basis for all calculations. Assume that each of the foreign subs will expect to end up with the same amount of funds as if invested locally. Any USD not used for funding can be invested at 0.5% over the period. Spot Rate Forward (7 Day) Spot Rate Forward (7 Day) Balances: USD GBP ZAR GBP/USD GBP/USD ZAR/USD ZAR/USD Bid 1.5189 1.5191 Bid 0.7348 0.7351 Ask 1.5195 1.5198 Ask 0.7351 0.7355 1,500,000 Deficit = need for funds 750,000 Surplus = available funds 500,000 Surplus = available funds Determine if the US HQ should set swaps for the funding, or just borrow locally. 7.0625% 0.50% Activate Go to Settin