the noon hour. We don’t know exactly what happened to the stock price
during that hour, but we can fill in the graph using linear interpolation.
A straight line is placed between the end points of the gap, and then the
graph looks complete.
Linear interpolation almost always produces a somewhat inaccurate
result. But sometimes it is better to have an approximation than to have no
data at all. Compare Fig. 2-10 with Fig. 2-2, and you can see that the linear
interpolation error is considerable in this case.
CURVE FITTING
Curve fitting is an intuitive scheme for approximating a point-to-point graph,
or filling in a graph containing one or more gaps, to make it look like a
continuous curve. Figure 2-11 is an approximate graph of the price of
hypothetical Stock Y, based on points determined at intervals of half an
hour, as generated by curve fitting. This does not precisely represent the
actual curve of Fig. 2-2, but it comes close most of the time.
Curve fitting becomes increasingly accurate as the values are determined
at more and more frequent intervals. When the values are determined
infrequently, this scheme can be subject to large errors, as is shown by the
example of Fig. 2-12.
EXTRAPOLATION
The term extrapolate means ‘‘to put outside of.’’ When a function has a
continuous-curve graph where time is the independent variable, extrapolation
Fig. 2-10. An example of linear interpolation. The thin solid line represents the interpolation
of the values for the gap in the actual available data (heavy dashed curve).
PART 1 Expressing Quantities
44