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Dividend Capitalization Model

Dividend Capitalization Model According to Gordon, the market value of a share is equal to the present value of future streams of dividends. A simplified version of Gordon’s model can be symbolically, expressed as TABLE Dividend Policy and Value of Shares of...

Arguments

Arguments It can be seed from the assumptions of Gordon’s model that they are similar to those of Walters model. As a result, Gordon’s model, like Walter’s, contends that dividend policy of the firm is relevant and that investors put a positive...

Gordon(s) Model

Gordon(s) Model Another theory which contends that dividends are relevant is Gordon’s model. This model, which opines that dividend policy of a firm affects its value, is based on the following assumptions: 1. The firm is an all equity firm. No external...

RELEVANCE OF DIVIDENDS

RELEVANCE OF DIVIDENDS In sharp contrast to the MM position, there are some theories that consider dividend decisions be an active variable in determining the value of a firm. The dividend decision is, therefore, relevant. We critically examine below two theories...