Final answer:
PIP₂ is involved in signal transduction; it's cleaved by phospholipase C into DAG and IP3, which are essential in the signaling pathways that enable cells to respond to external stimuli.
Step-by-step explanation:
Phosphatidylinositol 4,5-bisphosphate, commonly abbreviated as PIP₂, is instrumental in the cellular process known as signal transduction. When the enzyme phospholipase C acts on PIP₂, it divides it into diacylglycerol (DAG) and inositol triphosphate (IP3); both of these cleavage products act as second messengers in the cell. DAG remains in the plasma membrane and takes part in activating protein kinase C (PKC), which then phosphorylates specific amino acids in target proteins, while IP3 diffuses into the cytoplasm to bind to ligand-gated calcium channels in the endoplasmic reticulum, facilitating the release of calcium ions that perpetuate the signaling cascade. Therefore, the correct answer is c) Signal transduction.