In Build->Financial Assets->Advanced Portfolio Modeling->Rates of Return it says that the nominal growth rate is calculated as Inflation Rate + Real ROR + (Inflation Rate * Real ROR).
But that's not really the Fisher Equation, is it?
I admit I'm no finance guy, I'm just trying to understand what's happening.
Short answer: Yes, that is using the Fischer Equation.
Long answer below...
Source: Wikipedia https://en.wikipedia.org/wiki/Fisher_equation
The Fisher equation expresses the relationship between nominal interest rates, real interest rates, and inflation. Named after Irving Fisher, an American economist, it can be expressed as real interest rate ≈ nominal interest rate − inflation rate.
In more formal terms, where equals the real interest rate, equals the nominal interest rate, and equals the inflation rate, then
( 1 + i ) = ( 1 + ) ( 1 + )
Multiplying out the right side:
( 1 + i ) = 1 + + +
And subtracting 1 from both sides:
i = + +
And finally,
Nominal Interest Rate (i) = Inflation Rate () + Real Interest Rate () + ( x )
