How much interest will Michael earn on his Certificate of Deposit in the first year, based on the nominal interest rate?

To determine how much interest Michael will earn on his Certificate of Deposit (CD) in the first year based on the nominal interest rate, you need to understand how interest on CDs is calculated. The interest earned is commonly calculated using the formula:

Interest = Principal × Rate × Time.

In this case, the principal is the initial amount deposited in the CD, the rate is the nominal interest rate expressed as a decimal, and the time is typically in years.

If we assume that the nominal interest rate is expressed as a percentage and the time period is one year, applying the formula will yield the total interest earned during that period.

If B indicates an interest amount of $600, this result suggests that the principal amount and the nominal interest rate were in alignment with yielding such an outcome after a full year. It is essential for calculations like this to ensure that the principal and interest rate are known or correctly inferred from the context to make an accurate determination. In this scenario, with a principal amount and nominal rate aligned to generate $600 of interest, the answer of $600 accurately reflects the earnings on the CD for the first year.

To summarize, the correct choice is grounded in the basic principles of interest calculation relevant to fixed-income securities like Certificates of