You are given the following information concerning the historical risk and return relationship on five(5) securities

Investment category	Arithmetic mean	geometric mean	Standard deviations of returns
Common stock	10.28%	8.81%	16.9%
Treasury bills	3.54	3.49	3.2
Treasury bonds	5.10	4.91	6.4
Corporate bonds	5.95	5.65	9.6
Real estate	9.49	9.44	4.5

Required:

1. Why the arithmetic means are returns different from the geometric mean returns?
2. In what circumstances would each be useful?
3. Based on a relative measure of performance, determine the performance ranking of the securities
4. Explain the rationale behind the technique used in (c) above.