Van is a risk-averse investor. He wants to explore in investing stocks for his excess money for investment.

Stock	Expected Return	Standard Deviation	Beta Coefficient
EFM	8%	6%	1.0
GMM	12.5%	5%	1.8
SBS	20%	7%	2.5

1.) Suppose Van plans to purchase only one of the stocks to add to an existing portfolio that contains 15 other stocks and has a beta of 1.5. Which stock should the investor purchase if he wants the risk associated with the portfolio to be lower after the stock is added?

2.)Based on the risk-return relationship, which stock should Van prefer if he plans to invest all his money in only one of the stocks? He holds no other investments. What is the best measure use to make a decision? Show the solution and interpretation