Key Rate Duration question

CFA Level II Fixed Income
#1

Hi everyone,

quick question.

I noticed in the practice problems when the question gives you a couple of shocks (ex. 2 year rate up 20 bps, and 30 year rate down 50 bps)

I have seen both methods where you multiply the shock by the percentage allocation to the specific maturity in the portfolio,

and also, where you multiply the shock, by the allocation, and also by the duration of the specific maturity.

When do you do which? Anyone able to explain this difference?

#2

I think the difference is between calculating key rates for zero coupon bonds and regular bonds. Remember that for zero coupon bonds, the key rate equals the maturity. Does this help?