What is a 'prospectus'?

A prospectus is indeed a legal document that provides detailed information about an investment offering. It is primarily used in the context of securities, such as stocks and bonds, to inform potential investors about the nature of the investment, its risks, and the financial state of the issuing company. The information included typically encompasses the company's business model, financial statements, management team, use of proceeds from the offering, and any associated risks.

This document is crucial for compliance with regulatory requirements, ensuring that investors have access to all necessary information to make informed investment decisions. It serves as a protective measure for both the investor and the issuer, as it helps mitigate the risk of misinformation.

In contrast, the other options do not accurately capture the purpose and content of a prospectus. A summary of a company's annual report would not provide all the necessary details about a specific investment offering. An insurance policy relates to a different financial instrument than those typically covered in a prospectus. Lastly, while a financial statement of earnings may be included within the prospectus, it does not encompass the broader scope of the offering's details and risks.