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0 votes
asked Oct 22, 2016 in BUS 2016H - Financial Mathematics by anonymous
recategorized Mar 1 by Rowan

Do we have to show interpolation if we are not explicitly asked to do so? For example in most of the past papers, when you have to calculate the gross redemption yield and the question says nothing about interpolation, the memo simply says "by interpolation i=5.34534%"

1 Answer

+1 vote
answered Oct 23, 2016 by simon_rigby (4,220 points)
selected Oct 27, 2016 by Richard van Gysen
Best answer

Yes, you do have to use interpolation when it's impossible to use analytic methods (for example when you have to solve high-degree polynomials). The interpolation is not usually included in memos, because everyone's interpolation looks slightly different (because of different starting values).