what is a prospectus 
a prospectus is a formal document required by and filed with the securities and exchange commission sec that provides details about an investment offering to the public a prospectus is filed for offerings of stocks bonds and mutual funds the prospectus can help investors make more informed investment decisions because it contains a host of relevant information about the investment or security in areas other than investing a prospectus is a printed document that advertises or describes an offering such as a school commercial enterprise forthcoming book etc all forms of prospectus exist to attract or inform clients members buyers or investors investopedia julie bangunderstanding the prospectuscompanies that wish to offer bonds or stock for sale to the public must file a prospectus with the securities and exchange commission as part of the registration process 1 companies must file a preliminary and a final prospectus and the sec has specific guidelines as to what s listed in the prospectus for various securities the preliminary prospectus is the first offering document provided by a security issuer and includes most of the details of the business and transaction however the preliminary prospectus doesn t contain the number of shares to be issued or price information typically the preliminary prospectus is used to gauge interest in the market for the security being proposed 2the final prospectus contains the complete details of the investment offering to the public the final prospectus includes any finalized background information as well as the number of shares or certificates to be issued and the offering price 3a prospectus includes some of the following information some companies are allowed to file an abridged prospectus which is a document that contains some of the same information as the final prospectus another reason a prospectus is issued is to inform investors of the risks involved with investing in the security or fund although a company might be raising capital through stock or bond issuance investors should study the financials of the company to ensure the company is financially viable enough to honor its commitments risks are typically disclosed early in the prospectus and described in more detail later the age of the company management experience management s involvement in the business and capitalization of the stock issuer are also described the prospectus information also guards the issuing company against claims that pertinent information was not fully disclosed 3prospectus examplein the case of mutual funds a prospectus contains details on the fund s objectives investment strategies risks performance distribution policy fees expenses and fund management because the fees that mutual funds charge take away from investors returns the fees are listed in a table near the beginning of the prospectus fees for purchases sales and moving among funds are also included which simplifies the process of comparing the costs of various mutual funds 4typically high cost funds charge fees of about 1 5 whereas low cost funds charge less than 1 5as an example of a prospectus for an offering pnc financial pnc filed a prospectus with the securities and exchange commission in 2019 requesting a new issuance of debt the senior note being offered to the public is a bond or a promissory note to pay a specific yield by maturity for review senior notes are debt securities or bonds that take precedence over other unsecured notes in the event of bankruptcy senior notes must be paid first if assets are available in the event of company liquidation a senior note pays a lower coupon rate of interest compared to junior unsecured bonds since the senior debt has a higher level of security and a reduced risk of default 6below is a portion of the prospectus from the table of contents which provides basic information about the offering we can see the following information listed 