When you resize an Azure virtual machine, the existing disks are resized but not reorganized. Therefore, the objects that will be present after resizing VM1 depend on the resizing operation that you perform. If you only increase the size of the virtual machine, the objects that you created on the original disks will still be present. Therefore, the correct answer is:
D. Folder1, Folder2, App1, and volume E
After resizing VM1, the C and D volumes will be larger, but the folders that you created on them will still be present. The E volume, which is on a separate data disk, will also be larger, but the App1 application that you installed on it will still be present. Therefore, all of the objects that you created on the original disks and the new data disk will still be present after resizing VM1.