In this question, while calculating the yield we use linear interpolation. Although I know how to use it but the question is that how I know that the yield is between 4% and 5%?? It has been used in many questions but still it is unclear to me which rates we should take in trail and error?
Usually you can get a rough idea using binomial approximation, also you can check the corresponding table values. If all else fails you can try with the interest rate given in the question and then build up from there.
Hi Sunit_K, Can you elucidate the binomial approximation method to me? How can we use the tables to find the interpolation values? Some mentoring would be great! Thanks! Regards, SHyam
See this: https://www.acted.co.uk/forums/index.php?threads/approximation-of-interest-rates.9271/#post-35178
Suraj, thank you for the reply but my calculator isn't FX-85, nor am I using any of the said Texas models. I am using the FX-82MS model of Casio, which does not provide with the tables function, thus making it non-possible for me to use it. BTW, thanks for the help. Regards, Shyam
