Stock portfolio risk is managed by increasing or decreasing beta. Bond portfolio risk is managed by increasing or decreasing portfolio duration. Duration can only address parallel shifts in yield curve. Duration cant model / address non parallel shifts and twists. Key rate duration can address non parallel shift in yield curve for a specific maturity interest rate change. Using 2 bonds to hedge an Mortgage bond, instead of using one bond, both the parallel shift and twist of yield curve hedging can be modelled. Mortagage bonds have negative convexity as interest rates decrease because of pre-payment option. The definition of YIELD CURVE RISK is risk arising from non parallel shifts / twists in yield curve. Parallel shifts of yield curve is not considered part of yield curve risk. Can some one provide the intution for the below … 1. PO strips have negative key rate duration over short and intermedeate durations and positive key rate duration over longer run. 2. IO strips have postive key rate duration over the short term and have negative key rate duration over longer term. Thanks for any explanations…