DM/S$ currency versus currency bid-ask quotations

Question

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

Answer 1

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.