A student prepared 20% sodium hydroxide solution in a beaker to study saponification reaction. Some observations related to this are given below: (I) Sodium hydroxide solution turns red litmus blue (II) Sodium hydroxide readily dissolves in water (III) The beaker containing solution appears cold when touched from outside (IV) The blue litmus paper turns red when dipped into the solution. The correct observations are:

Sodium hydroxide is a basic compound used in the saponification process (the making of soap). As a base, its characteristic reaction with litmus is turning red to blue (I). It is an alkali, meaning it dissolves readily in water (II). However, the process of dissolving $NaOH$ is exothermic, releasing heat to the surroundings, which makes the beaker feel warm/hot (contradicting III). Blue litmus turning red (IV) is a property of acids, not bases.