The following are annual rate of return for US government T-bills and UK common stocks:

Year US Government T-Bills UK Common Stocks 2006 0.063 0.150 2007 0.081 0.043 2008 0.076 0.374 2009 0.090 0.192 2010 0.085

0.106

a. Compute the arithmetic mean rate of return and the standard deviation of rates of return for the two series Discuss these two alternative investments in terms of their arithmetic average rates of return, their absolute risk, and their relative risk. (5 b. Compute the geometric mean rate of return for each of these investments. Compare the arithmetic mean return and the geometric mean return for each investment, and discuss this difference between mean returns as related to the standard deviation of each series.