Final answer:
An indenture is a legal contract detailing the terms of a debt security between a corporation and a bondholder, including the coupon rate and other key terms. 3) indenture
Step-by-step explanation:
A contract between a corporation and a holder that contains the terms of a debt security is known as an indenture. This is a legal and binding contract that specifies all the important features of a bond, such as the coupon rate, maturity date, and other terms.
In the context of a corporation, which is a business owned by shareholders with limited liability for the company's debts, an indenture serves as a crucial document to protect the interests of bondholders, those who lend money to the corporation and are entitled to receive interest payments as well as the principal amount upon maturity.