CRT, a US based multinational has recently established two subsidiaries in Mexico. These subsidiaries are massive and do import a significant number of materials. The subsidiaries sell a large portion of their imports locally. CRT’s excess earnings beyond what it needs in Mexico is remitted back to the United States. CRT is planning to invest a large sum of excess earning in financial market in Europe in the future.

1. Explain how the CRT subsidiaries in Mexico would use the spot market in the foreign exchange.
2. Why might CRT want to invest funds in financial market in Europe.