The reaction of quicklime (CaO) with water to produce slaked lime (Ca(OH)2) is an example of an exothermic reaction.

Option 1: Displacement reaction. This option does not apply to the given reaction. A displacement reaction involves the replacement of one element by another in a compound. This is not the case in the given reaction.

Option 2: Endothermic reaction. This option does not apply to the given reaction. An endothermic reaction absorbs heat from the surroundings, causing a decrease in temperature. The given reaction releases heat, so it is not endothermic.

Option 3: Decomposition reaction. This option does not apply to the given reaction. A decomposition reaction involves the breakdown of a compound into simpler substances. The given reaction involves a chemical combination of quicklime and water, not decomposition.

Option 4: Exothermic reaction. This is the correct option. An exothermic reaction releases heat to the surroundings, causing an increase in temperature. The reaction between quicklime and water is exothermic, as it releases heat energy.

In conclusion, the correct answer is option 4, as the reaction of quicklime with water is an example of an exothermic reaction.