The correct option is C capable of nitrogen fixation if they have cyanobacteria
Lichens are generally formed by the association of algae with fungi. Sometimes, fungi can symbiotically partner up with cyanobacteria, which are photosynthetic prokaryotes, instead of algae to form lichen. When lichens are associated with cyanobacteria, they can fix atmospheric nitrogen due to the presence of specialised cells called heterocysts. Lichens are indicators of air pollution because they are sensitive to sulphur dioxide and do not grow in polluted areas. Lichens are
terrestrial and grow on rocks and trees. So, they cannot be indicators of water
pollution.
Symbiotic association between fungi and roots of higher plants is called mycorrhiza.