Back testing is generally model-based and uses historical data to evaluate new strategies. Which of the following best describes this concept?

Back testing is generally model-based and uses historical data to evaluate new strategies. Which of the following best describes this concept?

• A. It forecasts future prices using current market conditions.
• B. It is used to monitor live performance in real time.
• C. It is generally model based to test strategies using historical data.
• D. It creates synthetic data for stress testing.

Answer: (C)