Compute the arithmetic mean rate of return and the standard

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Reference no: EM13802943

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.

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.

Reference no: EM13802943

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