The Difference Between Implied Correlation and Base Correlation in CDOs

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.