The High Quality Corporation is a money management firm that was started five years ago. The firm has 20 discretionary, fee-paying accounts with an aggregate amount under management of $500 million. In preparing a report for a client that it is prospecting for funds, it has done the following: (1) presented the return for the past three years for five representative portfolios; (2) calculated the arithmetic average annual return over the past three years where the return subperiod was measured each year; (3) disclosed what the return would have been for the past ten years based on the actual performance for the past three years and simulated returns for the seven prior years using the same strategy that it employed for the actual portfolio; and (4) calculated the return before transaction costs and man- agement fees. Based on this information, explain whether High Quality Corpora- tion is in compliance with the AIMR standards.

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