1. CJ Patel Ltd has a share price of $1.95. The company has made a renounceable rights issue offer and the offer is a two-for-six pro-rata issue of ordinary shares at $1.65 per share.

1. Explain what does it mean by the offer being renounceable and to whom is this offer made?
2. Calculate the price of the right.
3. Calculate the theoretical ex-rights share price.

2. Explain the reason for the Basel II and III accords. What are their purpose, and how do they restrict the operations of banks? In your answer, use a hypothetical example to show how capital adequacy standards work in the Australian setting.