Toyota Motor Corporation (Toyota) is Japan's largest and the world's fourthlargest automobile manufacturer. The company offers well-known car models like Camry, Corona, Corolla and Lexus. Though a late entrant, compared to General Motors and Ford, Toyota has become one of the strongest players in the automobile industry. Toyota has continued to set new benchmarks for providing value to customers more effectively than competitors. Toyota is exposed to market risk due to changes in currency rates, interest rates and certain commodity and equity prices. In order to manage these risks, Toyota uses various derivative financial instruments. Justify the various financial risk that Toyota exposed to and how derivative instrument helps Toyota in mitigating each of the risk.