The present value of risky cash flows is calculated as follows:

I$)$ estimate the expected cash flows and discount these at a rate that is consistent with the risk of the cash flows

II$)$ estimate the certainty$-$equivalent cash flows and discount these at the risk$-$free rate

III$)$ estimate the expected cash flows and discount these at the risk$-$free rate

Question $13$ Answer

I only

II only

I and II only

III only