Let two time points, and ,on a yield curve be given,and let , be the yields at these maturities.You want to draw an interpolating curve between these maturities and are considering three alternatives: -Linear (L) :
-- --.
-Exponential (E) :
-- --.
-Logarithmic (G) :
-- --.
Since the interpolated curves will not coincide perfectly except at the two end-points,interpolated yields will be higher under some methods versus the others.What is the rank-ordering of size of interpolated yields?
A)
B)
C)
D)
Correct Answer:
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