DEFINITION of 'Key Rate Duration'
Holding all other maturities constant, this measures the sensitivity of a security or the value of a portfolio to a 1% change in yield for a given maturity.
The calculation is as follows:
Where:
P_{ }= Security's price after a 1% decrease in yield
P_{+ }= Security's price after a 1% increase in yield
P_{0 }= Security's original price
INVESTOPEDIA EXPLAINS 'Key Rate Duration'
There are 11 maturities along the Treasury spot rate curve, and a key rate duration is calculated for each. The sum of the key rate durations along a portfolio yield curve is equal to the effective duration of the portfolio.
RELATED TERMS

Yield To Maturity (YTM)
The rate of return anticipated on a bond if held until the maturity ... 
Empirical Duration
The calculation of a bond's duration based on historical data. ... 
Effective Duration
A duration calculation for bonds with embedded options. Effective ... 
Yield
The income return on an investment. This refers to the interest ... 
Yield Curve
A line that plots the interest rates, at a set point in time, ... 
Interest Rate
The amount charged, expressed as a percentage of principal, by ...
Related Articles

Bonds & Fixed Income
The Impact Of An Inverted Yield Curve

Investing
Where can I buy government bonds?

Taxes
Why should I keep records on my taxexempt ...

Bonds & Fixed Income
What determines the price of a bond ...