The document discusses using copula functions to model the cross-sectional and temporal dependence of losses for CDO tranches. It proposes representing the dependence between increments of losses over time periods and cumulative losses at the start of periods through copula functions. This allows constructing a recursive algorithm to compute the propagation of losses over time and derive a term structure of tranche premiums consistent with the cross-sectional and temporal dependence structure. The approach must be modified for credit losses due to losses being bounded, including constraints in the algorithm.