On Aug. 1, 2021, the Carlyle Group was in negotiation with a South Korean coffee shop chain operator A Twosome Place (ATP) to acquire the firms business for 12,500 million Korean won (KRW). The board of directors of ATP was reviewing the offer and would make decision by Nov. 1. If the buyout deal was struck, the Carlyle Group would have to pay the stated offer price, but there was a possibility that it might not be accepted by ATP shareholders. Carlyle was considering using currency options to mitigate the risk of increase in the buyout payment. Suppose Carlyle wanted a rate of $0.000800 = 1/1250 or lower. The table below summarizes spot prices and the option premiums for December call option observed on Aug. 1 and Nov. 1:

	Aug. 1st	Nov. 1st
KRW spot price	$0.000760	0.000840
Option premium for KRW call with a strike price $0.000800	$0.000012	0.000080

Answer questions (a) and (b) below (*use caution in dealing with decimal places).

a) Suppose that as ATP accepted the offer, Carlyle exercised the call option (rather than sell-closes the position) on Nov. 1. What would be (i) the net gain or loss taking into account the change in the buyout payment and the option premium? Additionally, compute (ii) the gain or loss associated with the change in spot price over the three months if Carlyle had not purchased the call option.

b) Suppose Carlyle closed out its call option position (i.e., sold the options), rather than exercising the options, on Nov. 1. What would be the net gain or loss taking into account the change in the buyout payment and the profit/loss from the call option position?