The scene is set in Rome at the house of Philario, where Posthumus intends to stay. Iachimo, a friend of Philario's, is speaking cynically about Posthumus, whom he has seen on a trip to Britain. He hints that he may not be as worthy as he is popularly believed to be. Philario replies that Posthumus has since grown in worth "both without and within" (line 10). Iachimo suggests that his marriage to the King's daughter gives him a reputation he does not deserve, and that people would rather exaggerate Posthumus's goodness than question Imogen's judgment for "taking a beggar" (line 24). He asks Philario why Posthumus is staying with him. Philario explains that he and Posthumus's father Sicilius were soldiers together, and that Sicilius saved his life.
Posthumus arrives and Philario introduces him to the others present-Iachimo, a Frenchman and a Dutchman. The Frenchman reminds Posthumus that he has met him before, at Orleans, where he made peace between Posthumus and another Frenchman when they were about to fight over a trivial matter. Posthumus protests that the matter was not trivial. Iachimo inquires what it was, and the Frenchman explains that Posthumus had maintained that his lover, Imogen, was more beautiful, chaste and virtuous than any woman in France. Iachimo sneers that either the lady or Posthumus's opinion must not still exist. Posthumus protests that both her virtue and his opinion hold. Iachimo extends the quarrel, saying Posthumus cannot set her above Italian women. Posthumus will not give ground.
Iachimo introduces a comparison between Posthumus's wife and his diamond. It may be, he says, that the diamond outshines many others that he has seen, but he has not seen the most precious diamond in existence, and neither has Posthumus seen the best woman in existence. When Posthumus says he values his diamond as more precious than any other, Iachimo wrongly implies that he prizes his diamond above Imogen. But Posthumus sets him right, pointing out that Imogen cannot be bought or sold, and is "only the gift of the gods" (line 88). Iachimo suggests that of Posthumus's two priceless things, the diamond ring and Imogen, the one could be stolen and the second is "frail" (line 94); both are vulnerable to thieves. Posthumus replies that Italy contains no courtier accomplished enough to convince Imogen to betray him, and neither does he fear the loss of his ring.
Iachimo issues a challenge to Posthumus: he says he could get the better of Imogen's-or any woman's-virtue "even to the yielding," an expression that implies sexual as well as military surrender. He wagers half his estate against Posthumus's ring that he will prevail. Posthumus refuses, saying that Iachimo deserves punishment.
Philario intervenes, asking them to forget their disagreement. Iachimo now wishes he had extended his wager to include his neighbor's estate. He suggests a bet of ten thousand ducats against Posthumus's ring that, given an introduction to the court where Imogen lives, he will defeat her honor and bring back proof. Posthumus agrees to the wager with the addition that if Iachimo prevails, he will not treat him as an enemy, since Imogen will not be worth the debate. But if Imogen refuses to be seduced, then for the insult Iachimo has offered to her chastity, Posthumus will fight him. Iachimo agrees and says they will have a legal agreement drawn up.
Philario says he is happy to let Posthumus's true worth speak for itself, rather than praise him unnecessarily: such is his confidence in the reality of his goodness. In Posthumus's case, there is no difference between appearance and reality.
Iachimo, in contrast, who cynically judges all men by his own debased standards, tries to suggest that Posthumus's reputation is not deserved and that he borrows any perceived worth from his marriage with the King's daughter. His attitude is a veiled warning that he will try to prove his mean estimation of Posthumus to be true-that he will attempt to bring him down to his own base level.
Iachimo's military metaphors are worth noting. He says that popular praise of Posthumus is calculated to "fortify" Imogen's questionable judgment, which is so weak it would fall before an "easy battery" (lines 21-3). He is confident that his conversation could "get ground of" Imogen (line 108) and make her yield-military terms for driving an enemy into retreat and making them surrender. This says much about his world view: to him, good people are enemies to be vanquished.
Iachimo's skill in making mischief is clearly portrayed in this scene. On hearing that Posthumus was previously willing to fight to defend his lady's virtue, he realizes that this is a sensitive area where Posthumus is vulnerable to attack. He quickly divines the things that are most precious to Posthumus (Imogen and the diamond she has given him), and attempts to equate the two by suggesting that Imogen can be stolen as easily as the diamond.
This scene makes use of images of buying, selling, and worth, a major theme in the play. The cynical Iachimo implies (line 15) that as a poor man, Posthumus's worth is only borrowed from the King's daughter, that he is "weighed rather by her value than his own." Also, Posthumus and Iachimo discuss in detail what Imogen, and Posthumus's diamond, are worth.
Cymbeline: Novel Summary: Act 1 Scene 5