|dc.description.abstract||In recent years, deregulation has become the mainstream in the financial market worldwide. It brings out the liberalization. This mainstream opinion is in line with the opinion of most of the classical economists, however, spawned many new challenges, such as the free flow of capitals. Some capitals are mainly for speculation, which increase the volatilities and hence the risks in financial market whether financial institutions or companies have to be very careful in hedging, as well as avoiding risk exposure.
The latest example happened in September 2007. This is one of the largest economic financial crisis. The scale of the financial tsunami is hard to imagine, including developing and developed countries, as well as the emerging economies. The impact of the financial crisis was the deteriorating fiscal situation of the leading governments, the shutdown of the companies and business, which also caused the problem of unemployment. However, we have found the main reason caused the financial crisis are the excessive use of financial engineering and high return of investment in derivatives. Furthermore, they ignored the extremely high risk behind its high-reward package. I would say that this is the core reason which gave rise to this centurial financial tsunami.
The economy of Taiwan has been affected by the international macro-economic and other policies. Therefore, how to effectively control the financial operation in order to avoid risk has turned to be a very important task in this issue. The following chapters will introduce the common strategies and methods of hedging in the market. I will devise the products into exchange rates, interest rates and commodities and will be explored in depth.