Your company has two Active Directory forests named Forest1 and Forest2, The forest
functional level and the domain functional level of Forest1 are set to Windows Server 2008.
The forest functional level of Forest2 is set to Windows 2000, and the domain functional
levels in Forest2 are set to Windows Server 2003.
You need to set up a transitive forest trust between Forest1 and Forest2.
What should you do first?

A.
Raise the forest functional level of Forest2 to Windows Server 2003 Interim mode.

B.
Raise the forest functional level of Forest2 to Windows Server 2003.

C.
Upgrade the domain controllers in Forest2 to Windows Server 2008.

D.
Upgrade the domain controllers in Forest2 to Windows Server 2003.

Explanation:

http://technet.microsoft.com/en-us/library/cc816810.aspx
Creating Forest Trusts
You can link two disjoined Active Directory Domain Services (AD DS) forests together to
form a one-way or two-way, transitive trust relationship.
The following are required to create forest trusts successfully:
You can create a forest trust between two Windows Server 2003 forests, between two
Windows Server 2008 forests, between two Windows Server 2008 R2 forests, between a
Windows Server 2003 forest and a Windows Server 2008 forest, between a Windows Server
2003 forest and a Windows Server 2008 R2 forest, or between a Windows Server 2008
forest and a Windows Server 2008 R2 forest. Forest trusts cannot be extended implicitly to a
third forest.
To create a forest trust, the minimum forest functional level for the forests that are involved
in the trust relationship is Windows Server 2003.