Which of the Following Is the Best Definition of Cross-Hedging

question 128

Multiple Choice

Which of the following is the best definition of cross-hedging?

• A) Risk that futures prices will not move directly with cash price hedged.
• B) An option that gives the owner the right, but not the obligation, to buy an asset.
• C) A contract that pays off when a credit event occurs, default by a particular company termed the reference entity, giving the buyer the right to sell corporate bonds issued by the reference entity at their face value.
• D) Hedging an asset with contracts written on a closely related, but not identical, asset.
• E) A financial asset that represents a claim to another financial asset.

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Definitions:

Locus of Control

Refers to an individual's belief system regarding the causes of his or her experiences, and the factors to which that person attributes success or failure.

Native Americans

The indigenous peoples of the United States, including both Native American tribes and Alaska Natives.

External Factors

Elements outside an individual that can influence their behavior, decisions, and well-being, such as the environment, social interactions, and cultural norms.

Success

The achievement of a goal or the attainment of wealth, position, honors, or the like.