How to interpolate a curve between two points?

[srujan90]

I have two points, for e.g. let's take an equity Index like SPX 500. I have the values of the Index 2021 Q1 and a value for 2022 Q2. Now, I want to interpolate the values for the rest of the quarters which is 4 values but not in a straight line. I want put a curve is place. Is there any methodology for this?

 

[Dason]

You would need to be more specific about the kind of curve you want. With only two values how should we know how the curve should look?

 

[srujan90]

Lets assume the start value of the equity Index is 100 and end value is 50. I need to fit 4 points in between. And it should be decreasing concave curve similar to the bond price vs yield curves.

 

[Dason]

Any other restrictions you can come up with? There are an infinite number of curves that meet your current criteria.

 

[srujan90]

Restrictions would be:

1) All 4 points should lie between 100 & 50.
2) They should be in a descending order i.e. 100> p1 > p2 > p3 > p4 > 50.
3) If possible the relative difference between 100 & p1 should be maximum as compared any other 2 adjacent points such as p2 & p3 or p3 & p4 etc.