The correct option is C There is no exchange of energy or matter with the surroundings.
In a closed system, only energy can be exchanged but not matter because the boundary that is seperating a closed system from its surroudings will be impermeable, rigid/non-rigid and diathermic in nature.
But the boundary of an isolated system is impermeable, rigid and adiabatic in nature. Thus, matter and energy cannot be exchanged by an isolated system with its surroundings.
An isolated system differs from a closed system by its inability to transfer energy (either as work or as heat) due to the presence of adiabatic walls seperating it from its surroundings.
Thus, option (c) is the correct answer.