(C) is the correct answer, as may have been evident from the class name. These drugs will bind to bile salts in the intestine. The drugs themselves are not absorbed. Bile salts are normally excreted in the bile and enter the intestine and then majorly recycled, conserving cholesterol. These resins will inhibit the recycling by binding to the bile salts and eliminate the cholesterol in the feces. The liver senses this loss and forms more bile salts from its own stores of cholesterol. But it still needs more cholesterol so it will increase the number of LDL receptors to get more cholesterol from LDL particles.
(A) describes the mechanism of action of statins.
(B) describes the mechanism of action of cholesterol absorption inhibitors, such as ezetimibe.
(D) describes the mechanism of action of niacin.
Examples of bile acid binding resins (aka bile acid sequestrants) are cholestyramine and colestipol.