Answer : Option D) II only.
Option I : IP packets need to be fragmented at routers if the outgoing link has a smaller MTU. Even TTL has to be decreased by devices having Network Layer (eg. Router). As it is mentioned whole IP Packet and not only IP data, so router definitely modifies packets when forwarding. So FALSE.
Option II : Yes, it is not necessary for a router to implement any routing algorithm. We can definitely use flooding and forward packets in all directions. So, TRUE
Option III: Reassembly procedure is done only at the destination and not at the routers. This is because, packets may follow different routes and all the packets may not arrive at the specific router. This might lead to perform fragmentation again and again Hence, a router should not reassemble IP fragments if the MTU of the outgoing link is larger than the size of the incoming IP packet. So, FALSE.
Resources: RFC: 815 | IP DATAGRAM REASSEMBLY ALGORITHMS