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Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Prudent Man Rule

Definition:

Years ago, this term was used after some courts decided that fiduciaries had to act in a reasonable way when deciding what to invest in. The courts eventually decided that prudent men invest in bonds and only bonds, so anyone investing in stocks was not prudent.

Since then, states have become a little more relaxed and use the prudent investor rule, which allows for different types of investments.