The first commenter, Tim, got it right - the OP either misheard "five hundredth of a second", or the speaker of that phrase got it wrong: it is singular "one hundredth of a second" but plural "five hundredths of a second", i.e. 0.05.
A five hundredth (1/500) is singular, and though it is numerically equal to 0.002, that number would be uttered as "two thousandths"; and 0.004 would be uttered as "four thousandths", not "two five hundredths", since 99.99% of people wouldn't, on the spur of the moment (including me), either make, or bother to make, the equivalency, since we commonly talk about tenths and hundredths and thousandths, not a five hundredth.
As others have pointed out, you would typically only talk about a five hundredth if you were talking about an item from among five hundred items; but what if you were to talk about multiples from the five hundred items? As Jasen asked and Zack answered, you have to be careful. To be consistent, "twenty five hundredths" would have to mean, arithmetically, 25 of 0.01, or 0.25; but if we mean 20 of 1/500 then we'd have to write "twenty five-hundredths"; and, to be consistent and clear, perhaps 1/500 should also be written as "a/one five-hundredth".