What is the nominal interest rate of Michael's investment?

To determine the nominal interest rate of Michael's investment, it's important to understand that the nominal interest rate refers to the stated interest rate on a financial product without adjusting for inflation. It represents the rate at which money will grow over time, based solely on the contractual agreement between the lender and borrower or the terms of the investment.

In this case, if the answer indicates a nominal interest rate of 3 percent, this means that Michael's investment is expected to yield a return of 3 percent annually. This value reflects what is typically shown in investment contracts and is crucial for comparing with other interest rates, such as real interest rates or rates adjusted for inflation.

If 3 percent is the correct choice, it suggests that it was found through contextual information provided about Michael's investment—this could be shown through documentation, investment summaries, or even market data relevant at the time of investment. A nominal rate like this is essential for understanding the basic yield of an investment or financial product before considering external factors like inflation or related risks, which could impact effective returns over time.