Patton Company Purchased $400,000 Of 10% Bonds Of Scott Co. On January 1, 2011, Paying $376,100. The Bonds Mature January 1, 2021; Interest Is Payable Each July 1 And January 1. The Discount Of $23,900 Provides An Effective Yield Of 11%. Patton Compa?

Unfortunately this question is incomplete and therefore cannot be properly answered. However, information on financial bonds can be given.

• What is a bond?

Bonds are a type of financial security which represent a loan. The issuer is the debtor, and the holder is the creditor. By issuing a bond, the debtor is promising to pay its debt on a certain date, when it reaches 'maturity', this is normally after several years. Depending on the terms set out when when the bond is issued, the debtor may have to pay interest to the holder. This interest is usually paid at set intervals - certain dates per year - through out the lifetime of the bond. This interest is known as the 'coupon'.

• How do bonds and stocks differ?

Bonds are different to stocks in that stockholders usually own a part of the company they are involved with, where as holders of a bond are simply loaners. Another big difference is that having an equity stake in a business is usually indefinite, whereas a bond has a maturity date.

Some types of bonds:

• Fixed rate bonds
• Floating rate notes
• Callable bonds
• Subordinated bonds
• Perpetual bonds
• Bearer bonds

Bearer bonds have no registered owner, and the amount to be paid can be paid to whoever is holding the bond at the time of maturity.