An analyst gathers the following information about a hedge fund: $200 million in assets under management at the beginning of the year, a 2% management fee based on year-end assets under management, and a 20% incentive fee calculated net of the management fee. If the fund's gross return is 25% during the year, the total fees earned by the fund manager are:

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Explanation:

Explanation:

**Option A ( $11 million):** Incorrect because it represents the sum of the management fee and incentive fee based on the dollar returns for the year (i.e.,$ 50 million times 0.02 for the management fee and $50 million times 0.20 for the incentive fee). However, the incentive fee should be calculated net of the management fee.
**Option B ( $14 million):** Correct because it accurately calculates the incentive fee net of the management fee. The total fee is the sum of the management fee ($ 5 million, calculated as $250 million AUM times 0.02) and the incentive fee ($ 9 million, calculated as ( $250 million -$ 200 million - $5 million) times 0.20).
Option C ($15 million): Incorrect because it represents the sum of the management fee and incentive fee calculated independently, without adjusting the incentive fee for the management fee. The correct calculation requires the incentive fee to be net of the management fee.

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