Stock Market Investors » Glossary of Stock Terms » What is a Prospectus?

What is a Prospectus?

By law every company is required to issue a prospectus and provide it to its investors and the potential ones. This document is required before the investor makes a decision on the investment in a particular stock. When the company makes an initial public offering the prospectus is needed for the potential investors to make reasonable decisions.

The prospectus includes information about the financial issues of a company. Additionally, it should include details regarding the investment risks that the stock potentially carries. Mutual funds and other regulated securities are also required to issue a prospectus.

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