Which option defines compensation?

• A. a reward or a payment that is given in exchange for some sort of negative incident
• B. a fashion accessory
• C. the act of compensating someone for a loss
• D. a public holiday

Answer: (A)

Compensation means making up for a loss or harm by providing payment or some form of recompense. The clearest fit here is the idea of the act of compensating someone for a loss, because it directly describes the process of giving something to offset damage or hardship. The other thought presented—payment as a reward for a negative incident—hints at payment but its phrasing can be misleading, since compensation is about offsetting loss rather than rewarding an event. The remaining options are clearly unrelated: one is just a fashion accessory, and the other is a public holiday.