Hi Does anyone know if bonds are infinitely divisible assets, or are they traded in multiples of its face value?
Good point Jensen! In the CT8 exam, unless you're told otherwise, I would assume that you can buy/sell bonds in any amounts, just like we assume in the other models. In real life, I'm sure a company cannot issue half a bond say. But I imagine it is possible to buy fraction of bonds, whether directly through some kind of investment manager, or indirectly by just investing in some investment/unit trust or hedge fund. Whoever you buy them off has bought whole numbers and then sold two halves on. There must be some limitations though. eg I bet I could (if I had the inclination to investigate) name a fraction x such that it is impossible to buy x bonds in Company "WeSellBonds", John
