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

Multiple Choice

• 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.

• Hedging an asset with contracts written on a closely related, but not identical, asset.

• A financial asset that represents a claim to another financial asset.

• An option that gives the owner the right, but not the obligation, to buy an asset.

• Risk that futures prices will not move directly with cash price hedged.