"You must automatically assume engine failure"
No, If you want to pass a JAR ATPL examination, you must automatically assume that the examiner wants you answer the question that he has asked you.
You must not convert it into the question that you wanted to have been asked.
There can be only one correct answer in this question and that is option d.
But as Dick has pointed out, we could argue that even that is not stricktly correct.
But we do not have an option that is marked "None of the above", so we are stuck with d.