Hole Punching (Paper Folding):

In the paper folding/hole punching section, you are given a shape of a flat square of paper which is usually folded one or more times, and then a hole or two is punched in some places of this paper. Then you are asked to unfold the paper in your mind to determine the locations of the holes on the original square of the paper. The solid lines indicate the current position of the edges of the folded paper and the dotted lines represent the original placement of the edges.

 The rules here are that the folded paper always remains within the edges of the original square, the paper is never turned or twisted, and there is only one correct answer.

The method that is usually used to solve this type of problem is drawing a four by four grid-like shape below and start unfolding the paper one step at a time. Before you start unfolding the paper back to its original position, and each time you unfold one layer of the paper, you put an X in the grid in the exact position of each hole you see. After that, you keep unfolding and putting X markers in the grid as the indicators of hole locations on the paper.

Here is a very easy and simple example, you first put an X marker for the hole you see before unfolding (red x). And then you unfold the bottom left corner and see another hole just down below the previous one (blue x). When you unfold the paper back to its original position (shown by broken lines), you will mirror the location of holes across the line of symmetry (where the folding occurred) and the two holes we already had in the down left corner will now be also mirrored in the downright corner of the square paper (green x). Therefore, option C is correct.