The correct answer is C. Dispersion.
Dispersion is the separation of white light into its component colors. This is caused by the different wavelengths of light being refracted (bent) at different angles when they pass through a medium such as water droplets. The shorter wavelengths of light, such as blue and violet, are refracted more than the longer wavelengths, such as red and orange. This is why we see a rainbow with red on the outside and violet on the inside.
Diffraction is the bending of light as it passes through a narrow opening or around an obstacle. This is caused by the wave nature of light.
Interference is the interaction of two or more waves of light. This can either cause the waves to reinforce each other, resulting in a brighter light, or cancel each other out, resulting in a darker light.
Reflection is the bouncing of light off of a surface. This is caused by the light hitting the surface at an angle and being reflected back at the same angle.