Wrong. Look at the question before state something my dear colleague: "The peer is using a policy-based VPN configuration."
It's says the peer, so you use Proxy IDs.
I think this should be C - Proxy ID
https://knowledgebase.paloaltonetworks.com/KCSArticleDetail?id=kA10g000000ClbXCAS
https://live.paloaltonetworks.com/t5/general-topics/phase-2-tunnel-is-not-up/td-p/424789
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