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(A) In December, a treasurer receives a notification of a RM20.000.000 borrowing requirement in March the following year. The loan will be needed for 6 months. By using strip hedging (combining Match and June futures contracts), what is the best strategy that the treasurer should take? (Indicate the strategy & number of contracts) (S marks) (B) You are the fund manager who holds 500 shares of XYZ sock. This XYZ stock price is stable and it hardly provides any capital gains. You would like to keep this stock in your portfolio to have diversification benefit. Discuss the best strategy that you could implement with the aim to gain revenue enhancement. The current market price for XYZ is RM6.00 Call options Put Options XYZ 5.80 0.15 XYZ 5.800.10 XYZ 6.00 0.13 XYZ 6.00 @ 0.13 XYZ 6.50 0.10 XYZ 6.50 0.15 You are required to answer the following questions O Name and outline the strategy. (4 marks) (1) Use the possible prices below to produce a payoff table to show the net profit loss St 5.00 $50 5.80 6.00 6.30 6.90 7.00 7.20 7.40 (6 marks) (C) You are a treasurer at City Finance Bhd. You have made an arrangement with Putra Finance to borrow RM2 million in December 2020 for a period of 3 months. Putra Finance agrees to lend you at a rate of 5% pa. You will also lend RM2 million to Jet Sdn Bhd. at KLIBOR0.5% starting in December 2020 for a period of 3 months. What would be your strategy in order to protect your interest income and why? (4 marks) Continued... LLCHONG BENIM FINANCIAL DERIVATNES You observe the following quotes on the 3-month KLIBOR futures contracts Sep 20 Oct 20 Dec 20 Mar 21 Jun 21 Contract Month Price 96.08 95.99 95.90 95.65 95 54 Outline your strategy (position, number of contracts, contract months and price)