Suppose CIBC were to package individual car loans into pools of loans and then sell shares of these pools to investors as CIBC car loan bonds. 

a. What is this process called? What effect will it have on investors compared to situations in which they could only buy and sell individual car loans?

b. What effect do you think CIBC’s actions will have on the ability of students to get loans?

c. Suppose that a very severe recession hits and, as a consequence, many buyers cannot get jobs and default on their car loans. What effect will this have on CIBC car loan bonds? Why is it likely that investors now believe car loan bonds to be riskier than expected? What will be the effect on the availability of car loans?