year             stocks                 u.s treasury bills
1986             6.5%                   6.16%
1987            -9.30                   5.47
1988            22.87                   6.35
1989            10.18                   8.37
1990           -21.56                   7.81
1991            44.63                   5.60
1)Calculate the average returns on the stocks and u.s treasury bills.
2)Calculate the variances and standard deviations of the returns on
the stocks and u.s. treasury bills.
3)Compare the returns and risks of these two types of securities.

Average return stocks = 6.79% Bills= 6.62%
Std deviation  Stocks = 23.4% Bills = 1.19%
Variance Stocks       = 5.48% bills = 0.01%

Use Excels following functions to get the above, Geomean,Stdev abd VAr
 
Of course go with T-bills as the return is very close to the returns
of stocks but with very little volatility (st dev)

Can you please provide the formulas on how to determine average return
on stocks, standard deviation and variances? (I am not familiar with
excel functions so I need to see the mathematical formula)

Also, PLEASE elaborate on the question regarding the returns and risks
of stocks versus treasury bills.

Thank you!

Sure I will give you for equity and you can do the same for Bills
first years return   = 6.5% therefore $1 at end of year 1 will = 1*6.5% + 1 
= 1.065
The year 2  the retun was negative 9.3 therefore now 1.065 will become
1.065*(1-0.093) = 1.065 * 0.907 = 0.9659

You keep doing this for all 6 years and so the formula now = 
1.065 * .907 * 1.2287 * ....... = "some number"
Since there are 6 years the average yearly retun will be the sixth
root of the above "some number" and that you can do it in any
financial calculator.
In excel the formula is A1^(1/6) where cell A1 holds the above "some number"

Standard deviation and Variance
Simply average the above 6 values 
Then find the difference of each value from the average and whole square it
Then add all the above six whole squares and divide it by 5 (6-1)
This value is the Variance. Square root of the variance is your standard deviation.

Good luck!!!