The correct response is:
It made Catholicism the religion of France, but allowed Huguenots freedom of religion.
The Edict of Nantes, issued in 1598 by King Henry IV of France, granted substantial rights to Huguenots (French Protestants) and effectively ended the French Wars of Religion. It allowed them to practice their faith freely in certain areas and provided them with political and civil rights, while recognizing Catholicism as the state religion.