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Can you elaborate on why you don’t feel that the answer is correct?
Let’s start with trust direction:
incoming trust means that AD B will provide access to AD A
outgoing trust means that AD A will provide access to AD B
Simple way to remember: “A trusts B”. E.g. if you trust someone with your money, then you have an outgoing trust to them; if someone trust you with their money then you have an incoming trust.
The question explicitly states “cloud-based users must be contained in a separate authentication domain” (ergo, we are making another AD); “and prevented from accessing on-premises systems”, later it states that there already is existing AD and it is ON-PREM.
Your supposed correct answer will provide access to existing AD ON-PREM to cloud-based users, which violates the condition of the item stem.
I suggest to read an explanation next time. In case if it’s not convincing and you decide to report a supposed mistake, provide more details than “it don’t seem right”, ideally with sources.