Bond A with par value of VND 100000, maturity after 15 years, coupon rate 12%/year, interest paid once a year Suppose after 1 year, after interest has been paid on the churtyr bond, the required market rate of return for bond A decreases and is only 8%, what is the then market price of bond A?

China during the reign of Emperor Taizu of Song (927 - 976 A.D.) witnessed a notable increase in commercial contacts with global markets.

Explanation:

Policies of Chinese rulers:

The government of China under Song dynasty enforced monopolies on certain manufactured items such as tea, salt, and chemical components for gun powder and market goods to boost revenues and to secure resources that are most important to the security of the empire. The government also had control on the taxation of imported goods, purchase and sale of imported goods, issue of foreign trade permits for local merchants.

Regional specialization promoted economic efficiency and increased productivity including the policies of the government such as a unified tax system, efficient trade routes by road and canal which connected all the important places throughout China and also promoted external trade.

One claim made in the passage is the government monopoly in external trade.

Economic development of China:

- China experience a notable increase in trade with global markets. Chinese cities of Song became some of the largest in the world, owing to technological advances. Yangzhou, the capital city became the economic hub of China.

- Merchants engaged in overseas trade invested in trading vessels and trade reached ports as far as East Africa. The Yangtze river, its tributaries trumped the commercial gain of overseas trade. About 50 countries had trade contacts with the Song dynasty.

- Witnessed the development of world's first banknote, or printed paper money.

- Demand for foreign luxury goods and spices from the East Indies in China encouraged the growth of Chinese maritime trade abroad. The economic power of Song in China influenced foreign economies abroad.

- Many foreigners were even appointed as officers supervising economic affairs.

The passage illustrates all the above points in the economic development of China under the Song dynasty.