Auxillary flag is set when we have carry out from the lower nibble to higher nibble..And carry flag is set when carry out from MSB..So we add the binary equivalent of the given hexadecimal numbers.
0110 1110
+ 0101 1101
---------------------
1100 1011
We have done this addition keeping in mind the carries..
So here clearly there is no carry out of MSB but carry out from lower nibble to higher nibble..
So , CY = 0 , AC = 1
Hence B) option is correct..