what comes first , prospect , lead ....? or lead then prospect ?

Hi

what comes first 

1. prospect then lead
2. lead then prospect 

if option 1 is correct, then why can't i create a sales quotation from the Lead 

and if option 2 is correct then why can't i create a prospect from the lead 

appreciate if you can clarify how the sales and marketing out of the box works 

thanks