Dividend capitalization method was developed by _________________.

Ezra Solomon

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Myron J. Gordon

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James E. Walter

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Merton H. Miller and Franco Modigliani

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Solution

The correct option is B Myron J. Gordon
The method of Dividend capitalisation reserve was developed by Myron J. Gordon. According to Gordon, the market value of shares is equal to the present value of future payments of dividends. This means that the market price of shares are affected by the payments of dividend and more the dividend better the market price of the dividend.

Suggest Corrections

List-I	List-II
(a) Dividend Capitalization Approach	(i) Traditional Model
(b) Dividend Policy has a bearing on the share valuation	(ii) Gordon Model
(c) Stock Market places more weight on dividends than on retain earnings	(iii) Walter Model
(d) Dividend payout is irrelevant to the value of the firm	(iv) Modigliani and Miller Model

List-I	List-II
(a) Modigliani-Miller approach	$1.$ Commercial paper
(b) Net Operating income approach	$2.$ Working capital
(c) Short-term money market instrument	$3.$ Capital structure
(d) Factoring	$4.$ Arbitrage