The correct answer is B. Myron J. Gordon.
The dividend capitalization model is a method of valuation that uses the present value of future dividends to estimate the value of a stock. The model was developed by Myron J. Gordon in 1959.
The model assumes that a stock’s price is equal to the present value of its future dividends, discounted at a rate that reflects the risk of the stock. The model can be written as follows:
P = D1/(r – g)
where:
P = the price of the stock
D1 = the dividend per share expected in the next year
r = the discount rate
g = the expected growth rate of dividends
The dividend capitalization model is a simple and straightforward method of valuation. However, it has some limitations. One limitation is that it assumes that dividends will grow at a constant rate. This may not be realistic, as dividends can fluctuate over time. Another limitation is that the model does not take into account other factors that can affect a stock’s price, such as changes in earnings or interest rates.
Despite its limitations, the dividend capitalization model can be a useful tool for estimating the value of a stock. It is important to remember, however, that the model should only be used as one part of a comprehensive valuation analysis.