Everything about duration: Yield shifts

  • 22 June 2020 (3 min read)

Yield curves plot interest rates (‘yields’) of bonds of equal credit rating and different maturities. The shape of a yield curve indicates potential future interest rate changes and economic conditions. A parallel shift to the yield curve would occur if the yield on all maturities along the curve shifted by the same number of basis points.  However, a yield curve will often shift in a manner which is not perfectly parallel. In this case, Key Rate Duration is an important concept in estimating the expected changes in value for a bond or bond portfolio.

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