To simplify this fraction, let's start with the x^12/x^2. To simplify the x's, you are going to subtract the exponent in the denominator from the exponent in the numerator (12-2=10). To simplify the y's, we are going to do the same process we did before and do 11-4 to get 7. Then, we are going to put the values we found as the new exponents to get x^10z^7 (first choice) which is the final answer.
I hope this helps.