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Definition: Interpolation

Interpolation is used as a system for assessing an obscure cost or yield of a security. This is accomplished by utilizing other related known qualities that are situated in arrangement with the obscure worth.

Interpolation is basically a method that is used to find the approximate price or yield which is not known by using the figures or information that is known to us. Interpolation is frequently utilized as a part of circumstances where a table of qualities is missing information. For example, some security tables list net yields for securities in a succession of 1, 3, and 5 years. Addition would be utilized to decide the yield for the second and fourth year. In actuality, interjection is a procedure of experimentation.

It is also known as 'Linear Interpolation'.


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