Question: Explain the savings plan formula. Choose the correct answer below. A. The savings plan formula calculates the simple interest rate that the issuer promises to

Explain the savings plan formula. Choose the correct answer below.

A.The savings plan formula calculates the simple interest rate that the issuer promises to pay. Forexample, a coupon rate of8% on a bond with a face value of$1000 means that the issuer will pay an interest of 8%$1000=$80 each year.

B.The savings plan formula is the annual percentage yield(APY) that would give the same overall growth over Y years. It is used as a convenient alternative to making an extensive table of APY calculations.

C.The savings plan formula calculates the accumulated savings plan balance as it grows because of the periodic deposits and interest. It is used as a convenient alternative to making an extensive table of savings plan calculations.

D.The savings plan formula is used by banks to determine the right interest rate to give to a person who is looking to open a savings account.

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