Introduction

The most complex formula you will see in this book is one of simple arithmetic. Although you have been taught that 1 + 1 = 2, Chapter 2 explains how, when it comes to risk management, 1 + 1 really equals 1.41. The level of mathematical sophistication in this book does not exceed the basics taught in high school, although they are applied in a slightly different way.

The typical risk management book is filled with complex formulas and Greek symbols. You will find neither in this volume. Instead you will find very commonsense concepts presented in plain English. Just as many professionals (such as lawyers, doctors, and even record producers as portrayed on the TV show American Idol) tend to mystify their craft using esoteric language, ...

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