Fernanda said that ___________________ her sister's old dress.

The correct answer, which indicates that Fernanda expressed a future intention or disposition concerning her sister's old dress, is "she would not wear." This wording implies that Fernanda is stating her feelings or plans regarding wearing the dress in the future.

In this context, "would" is often used to convey future intentions or hypothetical situations, making this phrasing appropriate for Fernanda's statement. It reflects a polite or considered refusal rather than an outright denial or capability, which is crucial in conveying her stance on the dress.

The other options, while all related to the idea of not wanting to use the dress, differ in nuance. For instance, one option suggests a refusal to borrow it, which introduces a different concept than merely not wearing it. Another suggests a preference that might not communicate the definitive stance that Fernanda is taking about her sister’s dress. The choice of “would not wear” succinctly captures her intention effectively and aligns well with the context of her statement.