Answer: effective duration.

**Explanation:** Key rate duration measures the sensitivity of a bond's price to changes in specific key rates along the yield curve, while effective duration measures the sensitivity of a bond's price to parallel shifts in the entire yield curve. When there is a **parallel shift** in the benchmark yield curve (meaning all rates move by the same amount), key rate durations sum to give the same interest rate sensitivity as effective duration. This is because: 1. **Key rate duration** decomposes interest rate risk into exposures to specific points on the yield curve 2. **Effective duration** measures overall price sensitivity to parallel yield curve shifts 3. For parallel shifts, the sum of key rate durations equals the effective duration **Why not the other options:** - **Modified duration** assumes a flat yield curve and measures sensitivity to yield-to-maturity changes, but doesn't account for non-parallel shifts or embedded options - **Macaulay duration** is a weighted average time to receive cash flows, not a direct measure of price sensitivity to interest rate changes Therefore, for parallel shifts in the benchmark yield curve, key rate durations indicate the same interest rate sensitivity as **effective duration**.

Author: LeetQuiz .