How is key rate duration different from effective duration?

Effective duration measures price sensitivity to a benchmark curve shift, usually framed as an up-and-down move in the curve used by the valuation model. Key rate duration breaks that curve exposure into maturity nodes.

Use effective duration when the question asks for overall sensitivity to a small benchmark shift, especially if expected cash flows may change. Use key rate duration when the question asks where the exposure sits on the curve or gives a nonparallel move.

Example: if only the 10-year node moves, key rate duration is the cleaner tool. If the whole benchmark curve shifts up and down in the model, effective duration is the broader measure.