I got the answer "correct" by choosing what I thought was the best choice out of the available options, but really, as Yelena pointed out, the answer is "it depends". The question didn't even address whether the function was scalar-valued or table-valued? CLR or not? One of the biggest things that it depends on is whether the function is deterministic (see User-defined Function Design Guidelines) and whether the values passed into the function are expressions involving only variables and literals or if it includes columns from the query.

If the system can determine both 1) that the function always returns the same value for the same input (it is deterministic) and 2) that the same values are passed into the function for every row (for a given execution of the query) then the function will be called once.

For example, assume that you have a user-defined function fnDateAdd that is equivalent to the built-in DATEADD function. Assume that a table with column OrderDate is specified in the FROM clause. Then consider the following to WHERE clauses:

WHERE fnDateAdd('day', 7, OrderDate) > '2008-02-13'

WHERE OrderDate > fnDateAdd('day', -7, '2008-02-13')

In the first case the values passed into the function vary for each row so the function has to be called for each row. In the second case the values passed into the function are the same for every row so it can be called once.