[Verse 1] When interest rates shift across the spectrum wide Not every bond moves in lockstep side by side Parallel shifts are just the simple case But yield curves twist in a complex space Your portfolio holds treasuries and corporate debt Each maturity point brings a different threat [Chorus] Key rate duration, slice by slice Measures how each tenor pays the price Two-year, five-year, ten and thirty too Each point of change affects what bonds will do KRD reveals the hidden risk inside When yield curves shift instead of moving wide [Verse 2] Take a barbell strategy, short and long combined If middle rates jump up, will profits decline? Standard duration says the answer's zero But KRD reveals you're not a hero Map each cash flow to its maturity date See which rate changes seal your portfolio's fate [Chorus] Key rate duration, slice by slice Measures how each tenor pays the price Two-year, five-year, ten and thirty too Each point of change affects what bonds will do KRD reveals the hidden risk inside When yield curves shift instead of moving wide [Bridge] Steepening curves and flattening trends On which key rates does your wealth depend? Sum all the pieces, get effective duration But keep the breakdown for risk calculation [Verse 3] Hedge funds and pension plans with complex books Need more than modified duration's simple looks Swap spreads and credit curves add more dimensions Key rate exposure guides their risk intentions Break down the sensitivity, piece by piece Watch portfolio volatility decrease [Chorus] Key rate duration, slice by slice Measures how each tenor pays the price Two-year, five-year, ten and thirty too Each point of change affects what bonds will do KRD reveals the hidden risk inside When yield curves shift instead of moving wide [Outro] When markets twist and yield curves bend Key rate duration is your trusted friend
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