You have an Active Directory forest that contains one domain named contoso.com. The
functional level of both the forest and the domain is Windows Server 2003.

You have an Exchange Server 2003 organization. All servers have Exchange Server 2003
Service Pack 2 (SP2) installed. You plan to transition to Exchange Server 2010.
You need to prepare the Active Directory environment for the deployment of the first
Exchange Server 2010 Service Pack 1 (SP1) server.
What should you run?

A.
Setup.com /Preparead

B.
Setup.com /PrepareDomain

C.
Setup.com /PrepareLegacyExchangePermissions

D.
Setup.com /PrepareSchema

Explanation:
Preparedomain isn’t even a correct switch.
You could argue that preparelegacyexchangepermissions is also correct as this would be
the first switch you would run if running them individually, followed by prepareschema.
However preparead will run preparelegacyexchangepermissions and prepareschema if it
detects they have not been run.
http://technet.microsoft.com/en-us/library/bb125224.aspx