- When a company sets forth a plan to sell securities and includes necessary information to inform the investors and then files this plan with the Securities and Exchange Commission (SEC), the plan is an example of a prospectus.
- A course catalog offered by a college listing the classes you can take is an example of a prospectus.
Origin of prospectusL: see prospect
- A formal summary of a proposed venture or project.
- A document describing the chief features of something, such as a business, an educational program, or especially a stock offering or mutual fund, for prospective buyers, investors, or participants.
Origin of prospectusLatin pr&omacron;spectus, distant view; see prospect.
(plural prospectuses or prospecti)
- A document, distributed to prospective members, investors, buyers, or participants, which describes an institution (such as a university), a publication, or a business and what it has to offer.
- A document which describes a proposed endeavor (venture, undertaking), such as a literary work (which one proposes to write).
prospectus - Investment & Finance Definition
A document that provides financial and other fundamental information about a proposed public stock or bond. A prospectus provides details about the offering, the company’s business, management, and financial performance as well as information on how it intends to use the funds raised through the offering. Typically prospectuses are issued for initial public offerings and bond offerings. Mutual funds also issue prospectuses before selling shares to the public, as do limited partnerships seeking investors for real estate, oil, or gas investments. The information in the prospectus comes from the registration statement, which the company has to file with the Securities and Exchange Commission before it can sell stock or bonds to the public. The company may issue a preliminary prospectus, or a red herring, while the SEC is reviewing the registration statement. The final prospectus may be called an offering circular. The term red herring is used because of the red letters that appeared on the cover of the offering, warning that the SEC had not yet approved the security for sale.
prospectus - Legal Definition