Questions 1. You decide to create your own index of higher-beta components of the Dow-Jones 30 Industrials. Use the data provided on six stocks in the furniture industry: La-Z-Boy, Kimball, Flexsteel, Legett, Miller, and Shaw to construct the efficient frontier. Please use two possible riskfree rate to identify two frontier portfolios, c = 0% and c = 3%. Use the data provided to perform the following analysis (data is monthly and please make sure to use the monthly risk-free rate in your calculation. Dow-Jones is price-weighted. The weight of each stock is the price of this stock divided by the sum of stock prices in the index).

1. Compute the variance-covariance matrix of returns;