Company A wishes to borrow 1 million US dollars at a fixed rate of interest. Company B wishes to borrow the equivalent 100 million Japanese Yen at a fixed rate of interest (spot exchange rate 100JPY/USD). As it can be seen the amounts required by the two companies are roughly the same at the current exchange rate. The companies have been quoted the following rates of interest, which have been adjusted to reflect the risk situations of the two companies:

Company Yen Dollar Company A 5.0% 9.6% Company B 6.5% 10.0%