Solvency is defined as a sufficiency of capital (or permanent/ semi-permanent funds) to meet unexpected losses.

companies issue stock and bonds, which individuals can purchase for their savings and investment plans.

Risk comes in many different forms, including operating risk, financial risk, legal risk, and environmental risk; each of these can be decomposed into even more granular classes.

a cycle based on financial reporting, planning, and decision-making,

FINANCIAL DECISIONS

Speculating, like investing, is a method of committing capital in order to generate a satisfactory return. Speculative activities are generally centered on a company's purchase or sale of securities, financial contracts, or select physical assets (commodities, real estate) rather than the direct purchase of productive assets used to create goods an

financial risk, which is the risk of loss coming from an adverse movement in financial markets/prices or the failure of a client/counterparty to perform on its contractual obligations.

enough to adapt to changing circumstances. Figure 1.1 The three-stage cycle of the financial process

OUTLINE AND STRUCTURE OF THE BOOK