Mathematical Principles and Quantitative Finance · 19. December 2024

**Runge's Phenomenon in Quantitative Finance: Key Insights** Runge’s phenomenon highlights oscillations in polynomial interpolation, especially with high-degree polynomials, leading to inaccuracies in applications like yield curves, implied volatility surfaces, and model calibration. In finance, these oscillations can distort rates or introduce artifacts, impacting pricing and stress testing.