How does HA determine the current failover capacity?

An administrator is configuring a vSphere HA cluster for three ESXi 5.x hosts and their resident virtual machines. The cluster will be configured to support a single host failure. Resource reservations must be enforced during a failover event. Assuming default settings, how does HA determine the current failover capacity?
A. Calculating the largest possible CPU and Memory guarantee for any running virtual machine in the cluster, then calculating how many virtual machines of that size can be started on the largest host and reserving space in the cluster accordingly.
B. Averaging the largest possible CPU and Memory guarantee for any running virtual machine in the cluster, then calculating how many virtual machines of that size can be started on the largest host and reserving space in the cluster accordingly.
C. Calculating the largest possible CPU and Memory guarantee for any virtual machine in the cluster, then calculating how many virtual machines of that size can be started on the largest host and reserving space in the cluster accordingly.
D. Averaging the largest possible CPU and Memory guarantee for any virtual machine in the cluster, then calculating how many virtual machines of that size can be started on the largest host and reserving space in the cluster accordingly.

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