Under the age-weighted historical simulation approach, more recent observations are assigned greater weight than older, more distant observations. This is achieved using a decay parameter (typically less than 1), allowing the model to be more responsive to recent market conditions while still utilizing a broader historical dataset. Option B describes the standard historical simulation. Option C would imply no decay, making it equivalent to standard historical simulation. Option D is incorrect as the historical window can be of various lengths (often 250 to 500 days or more).