Option 1: "They are coral islands." This statement is incorrect. The Andaman and Nicobar Islands are not coral islands. They are primarily composed of elevated portions of submerged mountains.

Option 2: "They are located in the Arabian Sea." This statement is incorrect. The Andaman and Nicobar Islands are located in the eastern part of the Bay of Bengal, not in the Arabian Sea.

Option 3: "These islands are elevated portions of submerged mountains." This statement is correct. The Andaman and Nicobar Islands are geographically formed by the rising of the ocean floor due to tectonic activities. They are part of a mountain range that runs underwater, and the islands are the elevated portions of these submerged mountains.

Option 4: "No option is correct." This statement is incorrect since option 3 is correct.