If you use futures prices to estimate the cash flows from commodity production, the estimates are
I.present values of future cash flows
II.certainty equivalents;
III.same as the estimates using spot prices
A)I only
B)II only
C)III only
D)I and III only

Question

Quizplus · Accepted Answer

Futures prices are often used as certainty equivalents because they reflect the market's expectation of future spot prices, adjusted for risk. They are not present values or the same as spot prices.

If You Use Futures Prices to Estimate the Cash Flows