Euromarket investment and fund raising A U.S.-based multinational company has two subsidiaries, one in Mexico (local currency, Mexican peso, MP) and one in Japan (local currency, yen, ). Forecasts of business operations indicate the following short-term financing position for each subsidiary (in equivalent U.S. dollars): Mexico: $83 million excess cash to be invested (lent) Japan: $67 million funds to be raised (borrowed) The management gathered the following data: Determine the effective interest rates for all three currencies in both the Euromarket and the domestic market; then indicate where the funds should be invested and raised. (Note: Assume that because of local regulations, a subsidiary is not permitted to use the domestic market of any other subsidiary.) The effective interest rate in the Euromarket for the US$ is %. (Round to two decimal places.) Data table - Item US $ Spot exchange rates Currency MP MP11.63/US$ 108.64/US$ Forecast percentage change - 2.96% + 1.48% Interest rates Nominal Euromarket 3.99% 6.23% 1.98% Domestic 3.75% 5.87% 2.14% Effective ck answer Euromarket Domestic