Financial Formulas - Category Interpolation

Interpolation is a mathematical technique that estimates values within a range based on known data points. In finance, it plays a pivotal role in predicting unknown financial values between observed data points. This method is crucial for constructing yield curves, pricing financial derivatives, and managing risk. By providing a means to estimate values at non-specific points in time, interpolation enhances the precision of financial models, aiding decision-making and analysis in various aspects of the financial industry.