ABSTRACT
In this introductory chapter, which is written in the form of a Galilean dialogue renewing the Platonic dialogue of Brigo, Morini, and Pallavicini (2013), we present the financial landscape of the book, touching upon credit value at risk (credit VaR), potential future exposure (PFE), expected exposure (EE), expected positive exposure (EPE), credit valuation adjustment (CVA), debt valuation adjustment (DVA), CVA versus DVA hedging, closeout conventions, netting clauses, collateral modeling, gap risk, rehypothecation, wrongway risk, Basel III, inclusion of funding costs, first-to-default risk, contingent credit default swaps (CCDS), CVA restructuring possibilities through margin lending, backward stochastic differential equations (BSDEs) and dynamic copulas (Markov copulas in particular).
