The new portfolio beta would be approximately 1.0953. This indicates that the portfolio would be slightly more risky than the old portfolio, but less risky than the stock with a beta of 0.59.
To calculate the new portfolio beta when you keep 87 percent of your money in the old portfolio and 13 percent in a stock with a beta of 0.59, you can use the following formula:
New Beta = (0.87 * Old Beta) + (0.13 * Beta of New Stock)
In this case, the new portfolio beta would be:
New Beta = (0.87 * 1.18) + (0.13 * 0.59)
New Beta = 1.0186 + 0.0767
New Beta = 1.0953
Therefore, the new portfolio beta would be approximately 1.0953. This indicates that the portfolio would be slightly more risky than the old portfolio, but less risky than the stock with a beta of 0.59.
It is important to note that this is just an estimate, and the actual portfolio beta may vary depending on the specific stocks and investments included in the portfolio.
To learn more about portfolio beta refer :
https://brainly.com/question/14986133
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