Answer: 14.08%

### Explanation **Option B (14.08%) is correct** because it accurately accounts for both the management fee and the incentive fee: 1. **Management Fee Calculation**: - End-of-year AUM before fees = $50 million * (1 + 20%) = $60 million. - Management fee = $60 million * 2% = $1.2 million. 2. **Incentive Fee Calculation**: - Net return after management fee = ($60 million - $50 million - $1.2 million) = $8.8 million. - Incentive fee = $8.8 million * 20% = $1.76 million. 3. **Total Fees**: - Total fees = $1.2 million (management) + $1.76 million (incentive) = $2.96 million. 4. **Investor's Net Return**: - Net return = ($60 million - $50 million - $2.96 million) / $50 million = 14.08%. **Option A (13.60%) is incorrect** because it fails to adjust the incentive fee for the management fee, leading to an overestimation of total fees. **Option C (14.40%) is incorrect** because it calculates the management fee based on beginning-of-year AUM instead of end-of-year AUM, resulting in an incorrect fee structure.

Author: LeetQuiz Editorial Team