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What is a prospectus & why is it important?

For investors, the prospectus is a valuable source of reliable information about the strategy, outlook, and performance of a given investment. A prospectus is legally required for every publicly traded stock, mutual fund, and exchange-traded fund (ETF). It lays out basic financial information, as well as the mission of the company or the fund.

What is a prospectus in finance?

A prospectus, in finance, is a disclosure document that describes a financial security for potential buyers.

What is a public company prospectus?

It lays out basic financial information, as well as the mission of the company or the fund. Public companies must include a prospectus as part of their initial (or “S-1”) filing with the U.S. Securities and Exchange Commission (SEC), and update it with any material changes, in order to issue shares to the public.

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