The Difference Between Implied Correlation and Base Correlation in CDOs

question 17

Multiple Choice

The difference between implied correlation and base correlation in CDOs is that

• A) Base correlation is the smallest correlation implied across all tranches of a CDO.
• B) Base correlation is the correlation of cumulative sets of tranches starting with the equity tranche, whereas implied correlation is for single tranches only.
• C) All base correlations are implied, but not all implied correlations are base correlations.
• D) Base correlation is historical and implied correlation is computed using tranche prices at a point in time.

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Explain the role of genetic and neurobiological factors in anxiety and obsessive-compulsive disorders.

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Definitions:

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