Answer: A
The drawn compound is 4-oxopentanal. Tollens' reagent oxidises only the CHO to carboxylate (ketone untouched); NaBH4 reduces the ketone but not the carboxylate, giving 4-hydroxypentanoate. On acidification and warming, the gamma-hydroxy acid closes to the five-membered lactone, gamma-valerolactone. B needs reduction of the acid, C stops after step 1.