Business and Personal Finance Dictionary

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• PROSPECTUS
  
  A prospectus is a formal written offer to sell stock to the public. It is created by an investment bank that agrees to underwrite the stock offering. The prospectus sets forth the business strategies, financial background, products, services, and management of the issuing company, and information about how the proceeds from the sale of the securities will be used. The prospectus must be filed with the Securities and Exchange Commission (SEC) and is designed to help investors make informed investment decisions. Each mutual fund provides a prospectus to potential investors, explaining its objectives, policies, investment strategy, and performance. The prospectus also summarizes the fees the fund charges and analyzes the risks you take in investing in the fund.
  
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