A pencil dipped partially in water appears bent because of :

The correct option is C refraction at water surface
Refraction is a phenomenon in which a light ray incident on a surface separating two transparent media bends at the change of medium.

Snell's law gives the relation between angle of incidence and refraction and the Refractive index of the respective medium.
${\mu }_1\sin \left(i\right)={\mu }_2\sin \left(r\right)$
where, i, r are the angles of incidence and refraction respectively.