Explanation

Correct Answer: A

Reasoning:

• Option A (Correct): Identifying investment goals and hypothesis is a fundamental part of the strategy design step. This involves defining what the strategy aims to achieve and formulating testable hypotheses about expected performance.

• Option B (Incorrect): Calculating maximum drawdown is typically part of the performance evaluation step, not the strategy design step. It's used to assess risk after the strategy has been implemented in the backtest.

• Option C (Incorrect): Using rolling windows to replicate the live investing process is part of the backtesting implementation phase, not the initial strategy design phase.

Key Concept: The strategy design step focuses on conceptualizing the investment approach, defining objectives, and establishing the theoretical framework before implementation and testing.