Explain the interpolation techniques
Explain the interpolation techniques.
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Finding the forward curve along with these properties amounts to selecting on a way of interpolating, ‘among the points,’ the ‘points’ meaning the constraints upon the integrals of the r function. Now here many proposed interpolation techniques given as:
• Linear within discount factors• Linear within spot rates• Linear within the logarithm of rates• Piecewise linear continuous forwards• Cubic splines• Bessel cubic spline and• Monotone-preserving cubic spline and also• Quartic splines.
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