Hedging one commodity by using a futures contract on another commodity is called
A) surrogate hedging.
B) cross hedging.
C) alternative hedging.
D) correlative hedging.
E) proxy hedging.

Question

Quizplus · Accepted Answer

Cross hedging involves using a futures contract on a different, but related, commodity to hedge a position, due to the lack of an exact futures contract for the commodity being hedged.

Hedging One Commodity by Using a Futures Contract on Another