This is a good QOD in that it prompted a careful reading of the syntax of an unfamiliar (to me, anyway) feature. The keywords "DELAY", "TIME", and "TIMEOUT" all sound so much like the same sort of thing that I had to read the definition of those terms two or three times. Let's see if I've got them straight now:
-- DELAY lets you specify an interval to wait after the WAITFOR statement is encountered before the rest of the SQL is executed.
-- TIME is an alternative to DELAY in that it lets you specify a specific time of day at which you want your SQL to continue to execute.
-- TIMEOUT gives you a safety net if you're waiting for a Service Broker message. Execution proceeds if the message hasn't arrived within the time you're willing to wait for it.
So, yes, all four options are correct answers as to what will terminate a WAITFOR, allowing the rest of the SQL to continue.