21-270: Things to Keep in Mind #3

Many people have asked about purchasing fractional amount of securities. From page 18 of the notes:

Unless stated otherwise, we assume that all securities can be purchased and sold
short in any amounts we choose (including fractional numbers of shares of stock) and
we ignore transaction costs, including the bid-ask spread. Moreover, we assume the
interest rate for investing is the same as the rate for borrowing (although we do allow
the interest rate to depend on the duration of the loan or investment). We shall
also assume that the price per share of a security is independent of the number of
shares involved in the transaction. We shall also ignore the effects of taxation. A
discussion of the validity of these assumptions from a practical point of view is given
in Appendix II. For assets other than securities, we shall always indicate whether or
not short sales are allowed.

This is as good of a time as any for me to remark that I believe that the lecture notes for 21-270 are by far the best written source for the material covered in this course. If you haven't already, you should begin reading the notes as we go through the corresponding material in class.

Dr. Kramkov is one of the few individuals in the world in possession of extraordinarily deep knowledge of both the theoretical and practical aspects of financial mathematics. He is one of the fields leading researchers and has been responsible for some of its biggest advancements in the last 20 years. Moreover, he served as head of research of one of the world's largest banks. As if that were not enough, he and Dr. Hrusa have the amazing gift of being able to present ideas in a friendly, but thourough manner.

Although the lectures are self-contained, you will not get the most out of this class if you ignore the excellent text.