--%>

DM/S$ currency versus currency bid-ask quotations

Provided the given information, state the DM/S$ currency versus the currency bid-ask quotations?

Bank Quotations              American Terms              European Terms

                                        Bid     Ask                       Bid          Ask

Deutsche Marks               .6784   .6789                  1.4730      1.4741

Singapore Dollar             .6999    .7002                  1.4282       1.4288

E

Expert

Verified

Equation 4.12 from text implies S(DM/S$b) = S($/S$b) x S(DM/$b) = .6999 x 1.4730 = 1.0310.  The reciprocal, 1/S(DM/S$b) = S(S$/DMa) = .9699.  Analogously, it is implied that S(DM/S$a) = S($/S$a) x S(DM/$a) = .7002 x 1.4741 = 1.0322.  The reciprocal, 1/S(DM/S$a) = S(S$/DMb) = .9688.  

Therefore, the DM/S$ bid-ask spread is DM1.0310-DM1.0322 and the S$/DM spread is S$0.9688-S$0.9699.

   Related Questions in Financial Accounting

  • Q : Prepare journal entry to record

    On December 31, 20x1, the Juniper Company purchase a group of four assets for a total cost of $850,000. An independent appraiser assesses the fair value of each asset as follows: Asset Fair Value Land $100,000 Building 600,000 Equipment 250

  • Q : Special drawing rights Discuss how the

    Discuss how the special drawing rights (SDR) are formed. And also, explain the circumstances due to which SDR was created.

  • Q : Creatives and Suites What happens when

    What happens when creativity based on individual exceptionalism has evolved as part of the orthodoxy of Western managerial practice is applied within a creative business organisation in the business of “symbolic production&rdquo

  • Q : Retail or client market and wholesale

    Distinguish between retail or client market and wholesale or interbank market for foreign exchange?

  • Q : Balance sheet A listing of the

        A listing of the liabilities, assets, and equity of an entity at a point in time, the end of a month, or quarter, or year. It is one of the four financial statements required in a full financial report. The balance sheet gives the reader what the entity owns (assets)

  • Q : Explain Return on Equity or ROE Return

    Return on Equity (ROE): The amount of net income returned as a percentage of share-holders equity. The return on equity measures a corporation's profitability by revealing how greatly profit a company produces with the money share-holders encompass in

  • Q : Country and political risk What is

    What is country risk and how it is different from the political risk?

  • Q : Objectives of Bretton Woods’s system

    State main objectives of Bretton Woods’s system?

  • Q : Restrictions of standard costing Write

    Write down the restrictions of standard costing?