Which of the following is most appropriate for measuring a bond's sensitivity to shaping risk?
A) key rate duration
B) effective duration
C) modified duration

Question

Quizplus · Accepted Answer

Key rate duration is the sensitivity to changes in specific key interest rates, which is tied to the shaping risk associated with yield curve movements. This makes it the most appropriate measurement for assessing a bond's sensitivity to shaping risk. Effective duration and modified duration are measures of a bond's overall sensitivity to changes in interest rates and are not specifically tied to shaping risk.

Which of the Following Is Most Appropriate for Measuring a Bond's