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: $90 million excess cash to be invested (lent) Japan: $60 million funds to be raised (borrowed) The management gathered the following data: Determine the effective interest rates for all three currencies in both the Euromarket and the domestic market; then indicate where the funds should be invested and raised. (Note: Assume that because of local regulations, a subsidiary is not permitted to use the domestic market of any other subsidiary.) USS \ Currency MP MP11.57/US$ -2.98% 108.01/US$ + 1.55% Item Spot exchange rates Forecast percentage change Interest rates Nominal Euromarket Domestic Effective Euromarket Domestic 4.03% 3.78% 6.21% 5.85% 2.02% 2.19%