You hold the market portfolio and believe that the risk premium for holding the market portfolio is 5% per year.

The risk-free rate is 2%. You are given the opportunity to invest a small amount in one of two new stock issues: Allied Inc. or Apex Corp.

Allied's stock has an annual standard deviation of 40%, a beta of 0.5, and an expected return of 5.0%. Apex's stock has an annual standard deviation of 30%, a beta of 1.0, and an expected return of 6.0%.

If you could add at most one stock to your portfolio, which would you add?