Hedging a spot position with a futures contract on a similar, but not identical, commodity is a ________ hedge.
A) Cross
B) Open
C) Commodity
D) Market
E) Program

Question

Quizplus · Accepted Answer

A cross hedge involves hedging a spot position with a futures contract on a similar, but not identical, commodity. In this case, the two commodities would likely have some degree of correlation, but may differ in quality or delivery terms.

Hedging a Spot Position with a Futures Contract on a Similar