Typical hedge funds often use bank credit leverage to expand their investment funds several times or even dozens of times on the basis of their original funds in order to maximize their returns. The high liquidity of securities assets of hedge funds makes it convenient for hedge funds to use fund assets for mortgage loans. A hedge fund with a capital of only 10 billion dollars can lend billions of dollars by repeatedly mortgaging its securities assets. The existence of this hit effect makes the net profit after deducting loan interest from a transaction far greater than the possible income from capital operation with only $6,543.8 billion. Similarly, it is precisely because of the leverage effect that hedge funds often face great risks of excessive losses in the case of improper operation.