Negotiable CD Solution 1 Suppose a 6-month $500,000 negotiable CD pays interest at maturity at a 5.0% annual rate. How much will the investor receive at maturity? PV = -500,000 I = 5/2 = 2.5 N = 1 PMT = 0 FV = ? = 512,500 So after holding the negotiable CD for 6 months, the investor will receive $512,500. Negotiable CD Example 2 Now suppose that immediately after the 6-month negotiable CD in the previous example was issued, market interest rates for 6-month CDs fall to 4.0% annually. What is the market value of the 6-month $500,000 CD with the 5.0% interest rate, considering the drop in market rates