(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
CaO + H₂O → Ca(OH)₂ + Heat. Since a large amount of heat is evolved, it is an exothermic reaction, and R directly explains A.
The textbook explicitly states that CaO reacts vigorously with water releasing a large amount of heat, and that reactions releasing heat are called exothermic reactions. So both A and R are true, and R is the direct cause/explanation of A — making option (A) correct. Do not confuse this with option (B); R here is not just a coincidental true statement but the actual reason why the reaction is exothermic.