C and E. Little confusion at first about E because of the use of the word "Packet" which is a layer 3 term rather than using "Frame" for a layer 2 concept. However, we need to remember that packet is a general term that is also used to replace other terms like a "frame" of other layers. CISCO questions like this tend to use it as well. Also, a L3 packet encapsulates a L2 frame which in turn embed a frame.
@squagmire You are right.
The Layer 3 (L3) packet, such as an IP packet, is encapsulated within a Layer 2 (L2) frame, such as Ethernet. This means the L2 frame contains the L3 packet, and that's how data is transmitted across local networks or physical networks.
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