In Statistics and Mathematics, extrpolation is the act or process of estimating the value of a variable or function outside the tabulated or observed range.
Interpolation:
Is the process of determining the value of a function between two points at which it has prescribed values. It is also a process using more than two points at which the function has prescribed values, as well as the process of approximating a given function by using its values at a discrete set of points.
Here is a very specific formula for doing interpolation:
Y(2)={[(x(2) - x(1)) X (y(3) - y(1)]/ [(x(3) - x(1)]} + y(1)
INTERPOLATION FORMULA
WHERE: Y(2)=TARGET RATE SOUGHT
X(1)=PRICE ABOVE THE TARGET
Y(1)=THE RATE FOR X(1)
X(2)=THE TARGET PRICE
Y(3)=THE RATE FOR X(3)
X(3)=THE PRICE FOR Y(3)
Interpolation can give you very accurate results provided several iterations or cycles are performed.
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