Answer: B) Our school principal is respected in the community.
Explanation: the denotation of a word is its literal meaning, the definition that we can find in a dictionary, a word can have several denotations (or definitions). The denotation of the word "principal" is first or highest in rank, importance, value, etc, it can also be the head or director of a school or a college. From the given options, the sentence that uses the word "principal" correctly, is the corresponding to option B, the other ones are referring to the word "principle."