You are considering using a new stock selection technique based upon the trading volume and price momentum. Before you start trading based upon the new system, you backtest the method using a simulated portfolio. The results are very good. Can you report the results of the simulated portfolio when making a pitch to potential future customers?

A.

Yes, so long as the potential customers are told that the returns are simulated.

B.

No, because the results were not real, but the result of a simulated portfolio.

C.

Yes, Standard III (D) permits including simulated portfolios, but only if included in the weighted average composite portfolios.

D. Yes, if the simulated portfolio beta is equal to the beta of the market portfolio.

When calculating performance history, how should terminated portfolios be accounted for?

	A.	Fifty percent of the terminated portfolios must be included in the calculation.
	B.	Terminated portfolios should not be included in the calculation.
	C.	Terminated portfolio must be included in the calculation.
	D.	Terminated portfolios can be included in the calculation, but does not have to be (may be included at the discretion of the portfolio manager).