The Stephan Reaction entails replacing a halogen, typically chlorine, on an aromatic ring with an alcohol group. This transformation is usually facilitated by a potent base such as sodium hydroxide (NaOH).The generalized equation for the Stephan reaction is:\[C_6H_5Cl + NaOH \rightarrow C_6H_5OH + NaCl.\]In this specific case, chlorobenzene reacts with sodium hydroxide to yield phenol (C6H5OH) and sodium chloride (NaCl). This exemplifies a nucleophilic substitution reaction, wherein the hydroxide ion from NaOH substitutes the chlorine atom in chlorobenzene.Consequently, option (2) accurately depicts the reaction.