Explanation

Let's break down the components:

Target swap: Receive-fixed USD, pay-floating JPY

Equivalent construction:

1. Receive-fixed USD, pay-fixed JPY currency swap (this gives us fixed payments on both sides)
2. Need to convert the fixed JPY payments to floating JPY payments

To convert fixed JPY to floating JPY, we need a pay-fixed, receive-floating JPY interest rate swap.

Why this works:

• The currency swap gives us: Receive fixed USD, pay fixed JPY
• The interest rate swap gives us: Pay fixed JPY, receive floating JPY
• Combined: Receive fixed USD, pay floating JPY (the fixed JPY payments cancel out)

Why not option B? Option B (receive-fixed, pay-floating JPY) would give us floating JPY payments but we'd be receiving fixed JPY, which is not what we want.

Why not option C? Option C deals with USD interest rates, but we need to convert JPY fixed to JPY floating.