The only preposition in the options available to you is of, so the correct answer is C.
A) and B) are conjunctions.
D) is an adverb.
Maybe their all watching T.V?
D. Bilbo fears all Wargs because they are allies of the goblins. He is assuming that every Warg is out to get them because they are not aligned with the goblins and the Wargs are.
This question is asking for the major idea or message that the poem is trying to get across.