Let us divide the 120 permutations into 5 categories: words beginning with M, A, H, E and S respectively.
In each category, we have 4! = 24 words (number of permutations of the remaining letters, except the first letter).
The first 24 words begin with A
The next 24 words begin with E
The next 24 words begin with H
Thus, we have now accounted for the first 72 words of the dictionary. If we count the next 24 words beginning with M, we exceed our required word number of 86. Therefore, the 86th word begins with M.
Now, the 24 words beginning with M can be further sub-categorized into 4 categories of words - those beginning with A, E, H and S - each containing 3! = 6 words.
The first 6 words (words 73 to 78) begin with MA.
The next 6 words (words 79 to 84) begin with ME.
Word 85, thus, has to be MHAES.
Word 86 has to be
MHASE.
Correct answer:
(D)