Here's a method to solve this problem:
At the start, I would consider that problems like these usually have integer solutions, so that k is likely to be 1, 2, 3 etc. If you try out k = 1, then a3 = 96 (that's answer E), and a4 would be 56+96 = 152. Not only does this prove that E is incorrect, but is shows that k<1. That's a sign that this problem is going to be difficult.
Next, algebra looks the best way, as you can use the formula an=an−2+kan−1 and substitute n = 3 and n=4 to give two equations:
a3 = 40 + 56k
122 = 56 + ka3
However, there's another warning clue here: this is going to give a quadratic equation, either with a non-integer solution (a quadratic with k) or a large number (a quadratic with a3). It would be almost impossible to solve in under 2 minutes.
For this reason, I would pivot to testing answers at this point. Let's test B:
a3 = 80, so 80 = 40 + 56k
56k = 40
k = 40/56 = 5/7
Check this with a2 + ka3 = a4
56 + 84k = 56 + (5)(80)/7
At this point, I'd see that we're going to get a non-integer solution instead of the desired 122, so I would know that B is incorrect. However, to find if B is too big or too small, I would try to estimate, i.e. 56 + (5)(80)/7 = approx 56 + (5)(11.5) = 56 + 57 = 113, i.e. too small, so the answer must be C or D. At this point in solving I'd probably be running out of time, so I'd likely be happy with a 50:50 guess.
If I had time, I would test C using the same approach:
a3 = 84, so 84 = 40 + 56k
56k = 44
k = 44/56 = 11/14
Check this with a2 + ka3 = a4
56 + 84k = 56 + (11)(84)/14 = 56 + (11)(6) = 56 + 66 = 122, so C is correct
This is an extremely hard problem, and would only be relevant to very top quant scorers, those aiming for 85+