Understanding the difference between physical and chemical changes
Yes, (B) is a physical change. Stretching the balloon simply rearranges the polymer strands in the balloon material, making them straighten out instead of being kinked up. When you let the balloon go, they just pull back to their former kinked shape.

Your reasoning on (C) and (D) is solid.

The answer is indeed (A). See Wikipedia's page on hydrolysis for more information.