In this problem, you will download market data and generate a state space for valuation purposes. Please carry out the following set of steps: 

(a) Download five years of monthly stock price data from the web. You may use a convenient source such as Yahoo! Finance. Do this for 10 stocks. 

(b) Convert the stock price data into returns. 

(c) Compute the mean stock returns for each stock and the covariance matrix of returns for all the stocks. 

(d) Use the covariance matrix and mean returns to generate the state space of stock returns using the Gram-Schmidt decomposition technique. 

(e) Price an option that pays off $1 million when the stock return exceeds 10% on more than five stocks. 

(f) Into which business decision might this option pricing problem provide you an insight?