Since AB is diameter, ∠AEB=90∘.
In △AEB,
∠ABE+∠EAB+∠AEB=180o ...[Angle sum property]
⟹∠ABE=180o−∠EAB−∠AEB
⟹∠ABE=180o–65o−90o=25∘.
Given, ED∥AB,
⟹ ∠DEB=∠EBA=25∘ ....[Alternate interior angles].
Since EDCB is a cyclic quadrilateral,
∠EAB+∠EDB=180∘ ...[Opposite angles of cyclic quadrilateral are supplementary]
⟹∠EDB=180o–65o=115∘.
In △EDB,
∠EBD+∠DEB+∠BDE=180o
⟹∠EBD=180−∠DEB−∠BDE
⟹∠ABE=180–25−115=40∘.
Hence, option D is correct.