In September 2000 the Pullman Group Arranged a Bond Issue

question 72

Multiple Choice

In September 2000 the Pullman Group arranged a bond issue for the estate of the late Marvin Gaye.The collateral on the bonds (and source of cash flow for interest and principal payments) consisted of future royalties from classic songs such as "What's Going On," and "I Heard It Though The Grapevine." The bond issue had a $1,000 face value and a coupon rate of 5%.If the bond matures in 26 years,pays semiannual coupons,and the yield to maturity is 6%,what will the bond sell for? Calculate your answer to two decimal points.

• A) $444.85
• B) $869.17
• C) $869.97
• D) $871.35
• E) $976.17

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Definitions:

Manufacturing Costs

The total expenses involved in the process of producing goods, including labor, materials, and overhead costs.

Levi Strauss

An iconic American clothing company known primarily for its denim jeans.

Future Benefits

The anticipated positive outcomes or returns that are expected to be received in the future as a result of current investments or actions.

Liabilities

Financial obligations or debts owed by a business to others, such as loans, accounts payable, and mortgages, which need to be settled over time.