Final answer:
A contract between a corporation and a holder that contains the terms of a debt security is known as an indenture.
Step-by-step explanation:
A contract between a corporation and a holder that contains the terms of a debt security is known as a(n) indenture.
An indenture is a legal document that outlines the terms and conditions of a bond issue, including the repayment schedule, interest rate, and any other provisions agreed upon by the issuer and the bondholders. It serves as a contract between the issuing corporation and the bondholders.
For example, if a corporation wants to raise funds by issuing bonds to investors, it will create an indenture that specifies the terms of the bond, such as the principal amount, interest rate, and maturity date. This document provides legal protection to the bondholders and ensures that both parties fulfill their obligations.