1. Supposed the 8 year spot rate is 8.5 % and the 3 year spot rate is 4.5% . The forecasted 3 year rate three years from no way is 6.85%. What is the implied forward rate on 2- year bond originating 6 years from now ?
2. Jamie Lee and Ross estimate that they will have 1 million in liquid assets to withdraw from at the start of their retirement. They plan to be in retirement in for 30 years. Using Exhibit 14-5 how much do you think Jamie Lee and Ross can withdraw each month and still leave their next egg intact? How much can they withdraw each month that will reduce their next nest egg to zero?