If the lender decides that he no longer wants to hold this bond, he cannot demand payment from the borrower because the contract does not give the owner of the bond the right to payment on demand. But he can sell it to someone else, and the price of this sale need not be $1000. If market interest rates have risen since the original purchase of the bond, the present value of future payments in the Get column will drop, and so will the value of the bond. Another way of seeing this principle is to realize that if the market interest rate rises to 15%, there will be borrowers selling contracts for $1000 that pay $150 each year until the maturity of the bond (when the contract ends). It would be foolish to pay $1000 to buy a contract that pays only $130 a year.
The notion of present value may seem dry to someone who has never owned a bond or made business decisions. But for many corporate financiers, and for those who have money invested in bonds, it is a notion that provides a lot of excitementboth joy and woein their lives.
The notion of rational consumers leads to an important concept called consumers' surplus.