First, determine the Exposure at Default (EAD): EAD = Outstanding + (Drawdown \times Undrawn) = \`80,000 + (0.70 \times \20`,000) = \`94`,000$

Calculate Expected Loss (EL): EL = EAD \times PD \times LGD = \`94,000 \times 0.02 \times 0.40 = \$752`$

Calculate Unexpected Loss (UL) given that only PD and LGD have variation: $UL = EAD \times \sqrt{PD \times \sigma_{LGD}^2 + LGD^2 \times \sigma_{PD}^2}$ Where $\sigma_{PD}^2 = PD \times (1 - PD) = 0.02 \times 0.98 = 0.0196$. UL = \`94,000 \times \sqrt{0.02(0.30^2) + 0.40^2(0.0196)}$ $UL = \94`,000 \times \sqrt{0.0018 + 0.003136} = \`94,000 \times \sqrt{0.004936}$ $UL = \94`,000 \times 0.07025667 \approx \`6`,604$

Option C is exactly correct.