what exactly is a hazard rate (page 89 of schweser text or 286 of the cfai text (volume 2)?
Pretty sure hazard rate is the probability of depleting our assets by a certain age and spending rate. Also pretty sure it uses monte carlo simulation.
i thought the probabilities were inside the table (i.e. under the $2.00 (%)
LOL sorry didn’t look at the book. No idea what Hazard is…l don’t think they explain it.
Be aware that CFA could use failure rate in its place.
Probability of ruin (or ruin probability) is used in the curriculum as well.
It’s basically the probability of running out of money before you croak based on a bunch of variables.
The OP is talking about specifically the number given by Lambda I believe.
i think the probability of ruin is under the real annual spending the hazard rate has its own column. oh well. too late now. it wont make or break me.