ID NUMBER: 4031

IsBank Kosovo Branch has the following balance sheet. a) Do you think it is a good idea for Isbank Kosovo to hold treasury bills and reserves? Why or why not? Please note that reserve requirement ratio in Kosovo is 10%. b) Assume that all assets and liabilities have floating interest rate. Suddenly interest rates doubled in the market, and expected to be on a high level for a long time. Would Isbank Kosovo be better off or worst off? Explain. (20 points) Please calculate and explain both a) and b) based on current quarter (30.09.2020). iSBANK alance Sheet as at: 30.09.2020 Euro 'D00 Previous quarter Current quarter (30.06 2020) (30.09 2020 Assets Cash and balance with COX 11.649 18 882 Claims on banks 4.637 7.589 Treasury bills 2.463 1 350 Westment Securities Loans and advances to customers 77.181 roperty and equipmer 2 530 76.381 Intangible assets Deferred tax assets Total misets 100,776 106,939 Liabilities Customer Deposit Due to banks 71 674 89.113 Other borrowed funds 1.590 2.581 Deferred tax liabilities Other liabilities Total Liabilities 2.186 2.15 Shareholders' equity Share Capital 10.000 Capital Reserves stained Profit / (Los) from previous year urrent Year Profit / (Love) 700 her equity capital components shareholder's equity 11,494 Total abilities and shareholder's equity 100 776 106 939