Macaulay Versus Modified Duration

This problem practices a core fixed income concept that comes up often in debt and leveraged finance interviews, understanding the difference between a bond’s timing measure and its interest rate sensitivity measure. Candidates need to know how duration is used to think about when cash flows are received, how bond prices react to changes in yields, and why investors care about each perspective when managing rate risk. Interviewers ask this because it tests whether you can move beyond definitions and explain how duration helps assess risk in real capital markets settings.