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Water stored in a dam possesses:
A. Potential energy
B. Electrical energy
C. Kinetic energy
D. None

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Answer
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Hint: Water stored in a dam indicates that it is a stored form of energy. It is invisible energy and it will become work only if it is released. After releasing, it will do work to attain its state of rest.

Complete step by step answer:
Potential energy is the energy possessed by a body due to its position or shape. This work done will store as energy. Water stored in a dam, stretched or compressed spring and stretched bow are the examples of potential energy.
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In the case of water stored in a dam, gravitational potential energy is the potential energy. In this case, the potential energy gained by the virtual position or elevated position of the object.
The formula of gravitational potential energy is;
\[U=mgh\], where m is the mass of the object, g is the acceleration due to gravity and h is the height at which the object is placed.
Hence, the option A is correct.

Additional information:
Sometimes work will not convert directly into kinetic energy. Instead of it, the energy gets stored or will be hidden. This stored energy is the potential energy. Elastic potential energy, gravitational potential energy and chemical potential energy are different forms of potential energy.
Elastic potential energy; It is the energy stored in the elastic materials due to the stretching or compressing of the same materials. If we stretch more, more energy will store. Elastic potential energy can be calculated as the product of half of the spring constant and square of the stretched or compressed distance. The spring constant is a parameter to measure the resistance to being stretched or compressed.
\[P{{E}_{elastic}}=\dfrac{1}{2}k{{x}^{2}}\]

Chemical potential energy; It is stored in chemical bonds of the materials.
Gravitational potential energy; This energy is stored in the object as the result of its vertical position or height or elevated position. Water stored in dams is an example for this type.
The formula of gravitational potential energy is;
\[U=mgh\], where m is the mass of the object, g is the acceleration due to gravity and h is the height at which the object is placed.
Gravitational potential energy gets converted into kinetic energy during the fall of that object. Even though the sum of potential energy and kinetic energy will be the same at any time.

Note: Potential energy gets converted into kinetic energy only if the water is flowing outside from the dam. Otherwise it has potential energy only. Specifically, gravitational potential energy.