You have been asked by your firm's chief investment officer (CIO) to estimate the risk/return profile of two competing real estate investments. In order to do so, you discuss the prospects for the general economy with your firm's in-house economist. From which, you produce a forecast of expected returns to each of the investments over the firm's anticipated holding period, given the economic landscape outlined by your colleague.

Economic Scenarios Likelihood Project #1 Project #2 "Double-Dip" "Slow-and-Steady" "Rebounding" Stagflation 20% -1.0% 1.0% 30% 5.5% 4.5% 30% 12.5% 14.5% 20% 9.0% 10.0%