How should I think about the relationship between Macaulay duration and modified duration instead of memorizing two separate definitions?

Start with Macaulay duration as the time structure of the bond, then view modified duration as that timing structure translated into local price sensitivity.

Macaulay duration answers: "On a present-value-weighted basis, how far away are the cash flows?"

Modified duration answers: "Given that timing structure, how sensitive is price to a small change in yield?"

If Crescent Harbor Energy has a high coupon, more of the bond's value arrives early. That shortens Macaulay duration. Because earlier cash flows reduce exposure to discount-rate changes, modified duration usually falls as well.

So the concepts are linked:

• earlier cash flows -> lower Macaulay duration
• lower time concentration -> lower price sensitivity
• lower price sensitivity -> lower modified duration

That is the intuitive bridge the exam wants you to recognize.