Which equation represents the graph?

It's the second choice.  We have the parent graph of the absolute value function moved down only, not side to side.  So there is no x movement to be indicated inside the absolute value symbols along with the x.  When a function moves down, it is indicated by a negative in front of the number.  Our parent graph [absolute value of x] is moved down by 2.5 so we have [abs.value x] - 2.5