Step 1: A finite state machine has a fixed, finite number of states and no auxiliary storage, so it has finite memory only. That rules out option (D).
Step 2: FSMs accept exactly the class of regular languages. Many context-free languages, such as \( \{ a^n b^n \mid n \ge 0 \} \), need counting and cannot be recognized, so option (A) is false.
Step 3: The halting problem is undecidable even for full Turing machines, so an FSM cannot solve it. Option (B) is false.
Step 4: By definition, regular languages are precisely those an FSM can recognize. So option (C) is the true statement.