The correct answer is: A. Walter’s Model
Walter’s model is a dividend valuation model that assumes that investors prefer dividends to capital gains. The model states that the value of a stock is equal to the present value of its future dividends, discounted at a rate that reflects the risk of the stock.
Residuals Theory is a model that explains how firms allocate their cash flows between dividends and investment. The theory states that firms will pay dividends only if they have excess cash flow after all profitable investment opportunities have been exhausted.
Gordon’s Model is a dividend valuation model that assumes that dividends grow at a constant rate. The model states that the value of a stock is equal to the present value of its future dividends, discounted at a rate that reflects the risk of the stock and the growth rate of dividends.
MM Model is a model that analyzes the relationship between capital structure and firm value. The model states that, in a perfect market, the capital structure of a firm does not affect its value. This is because investors can adjust their portfolios to take on the same amount of risk regardless of the firm’s capital structure.
In conclusion, Walter’s model is the only model that stresses on investor’s preference reorient dividend than higher future capital gains.