As the CFO of Flintstone Logistic Berhad, you anticipate borrowing RM1 billion at 1.75
percent above KLIBOR in July 2017. Currently, the quoted prices for July 2017
KLIBOR futures and physical interest rates are 96.65 and 3.15 percent, respectively.
The interest rate is expected to rise steadily from today, early January 2017, until end of
of the year. In managing rising domestic interest rates, establish your hedge strategy
by showing its effective interest rate at the maturity of July 2017 KLIBOR futures, both
rates are settled at 3.6 percent per year.