How should Macaulay duration be envisaged concerning bond price changes?

Macaulay duration is a key concept in fixed income analysis that measures the weighted average time until cash flows from a bond are received, expressed in years. It is closely related to the bond's price sensitivity to changes in interest rates. The correct interpretation of Macaulay duration is that it helps to understand how bond prices react to changes in interest rates.

When referring to bond price changes, Macaulay duration indicates the point where the present value of the bond's cash flows (the price) will change due to interest rate movements. Specifically, when interest rates rise, bond prices generally fall, and the degree of that change is often approximated by the duration. The correct choice connects this concept to the offsetting effect of higher interest rates; as rates increase, the present values of future cash flows decline, but the Macaulay duration helps establish a timeframe over which these changes balance out, revealing how sensitive the bond is to interest rate changes.

The other options do not accurately represent the relationship between Macaulay duration and bond price changes. For example, the idea of being "unaffected by interest rates" contradicts the fundamental nature of duration, which is, by definition, related to changes in rates. Similarly, while consistent coupon rates could