Final answer:
The nominal rate of interest, given a 9% real rate of return and a 3% rate of inflation, is calculated using the Fisher equation and is approximately 12 percent.
Step-by-step explanation:
The question regards the calculation of the nominal rate of interest when the real rate of return and the rate of inflation are known. Using the Fisher equation, which expresses the relationship between these rates, the nominal rate (i) equals the sum of the real rate (r) and the rate of inflation (h), or i = r + h. Given a real rate of return of 9% and a rate of inflation of 3%, we calculate the nominal rate as follows:
To find the nominal rate, we add the rate of inflation to the real rate of return.
Rate of inflation = 3%
Real rate of return = 9%
Nominal rate = Real rate of return + Rate of inflation
Nominal rate = 9% + 3%
Nominal rate = 12%