Final answer:
Nora, as a preferred stockholder, would be paid her dividend before common stockholders once ABC Corporation declares a dividend. However, secured creditors and bondholders are paid before any stockholders.
Step-by-step explanation:
When the ABC Corporation declares a dividend, Nora, as a preferred stockholder, would be paid her dividend before common stockholders. Preferred stock dividends are prioritized over common stock dividends, meaning they are distributed first. However, it's important to note that all secured creditors and bondholders would be paid before preferred stockholders, as debt obligations are generally satisfied before equity payouts. Preferred shareholders have a preferential claim over the company’s assets and earnings, but they stand behind debt holders in the claim hierarchy.
In essence, when a company like ABC Corporation, which is a business owned by shareholders with limited liability for the company's debts, distributes profits in the form of dividends, the order of payment typically follows a structured sequence. Secured creditors are paid first, followed by bondholders due to their coupon rate interest, and then preferred stockholders receive their dividends before common stockholders do. This structured payout system emphasizes the risk hierarchy in corporate finance, where debt is generally considered less risky than equity and hence, gets priority in payment.