To put this in context, when we talk about risk, we are talking about events that could happen with some probability in the future. As we all know, there is an abundance of risks in our future. Some risks we try to avoid, and others we just accept. Finance is, in reality, the study of which risks we take, and how much we expect to be compensated for taking them. This is the framework that is at the heart of finance, and it is especially pertinent these days when we see the present turbulence in the financial markets.20