When you read a "must be true" question on the GMAT involving inequalities or absolute values, your immediate goal should be to try and prove the statements FALSE. The easiest way to do that is to pick a smart, simple number that fits the initial condition.
And when absolute values are involved you absolutely want to begin by testing negative numbers! Let's use -2. Also be aware that squaring a number (or raising it to any other even exponent) and the absolute value of a number have something in common: the result is never negative. Unless it's zero, the result is always positive. Always keep this in mind when you look at absolute value questions.
The prompt tells us that w is not equal to 0. This means w can be any positive or negative number, it just can't be zero. Let's test our chosen negative number, w = -2.
Statement I:
|w| / w = 1
If we plug in w = -2, the equation becomes: |-2| / -2 = 2 / -2 = -1
So Statement I is not a "must" be true. It could be true (choose a positive number), but it does not have to be true. We can instantly cross out any answer choices that include I.
Now let's look at Statement II:
(w^2) / |w| = w
Here again, we benefit from having chosen a negative number. The left-hand side of the equation would have to be positive, which means the right-hand side could not be -2. Statement II is not a "must" be true.
Now let's look at Statement III. We'll write "The square root of w squared = |w| " as
sqrt(w^2) = |w|
Important note here: do "squaring" and "square rooting" always cancel each other? Not when a number appears under the square root symbol. If something appears inside the square root symbol, the result is defined as the "positive root."
Suppose x^2 = 25. Well, yes, x itself could be 5 or -5
BUT...
sqrt( (-5)^2 ) = sqrt (25) = positive 5. That's just a rule. A squared number becomes positive under a square root symbol.
Similarly, if we choose -2, the square root of "-2 squared" is the same thing as the square root of positive 4, which equals positive 2.
sqrt( (-2)^2 ) = |-2|
sqrt(4) = 2
In this case, 2 = 2, so it works. Because a squared number becomes positive under a square root, the output will always match the absolute value of the original number, regardless of whether w is positive or negative. It is an algebraic identity.
So Statement III must be true.
Answer B
One additional point - because the question does NOT say that w has to be an integer, we could have also chosen a negative number that is ALSO a fraction. Say, -1/3.
For this question, -2 was all we'll needed, but for hard questions using a negative fraction can be very helpful, as well.