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for 3. B is correct, they ask about the value of the option on expiry date. If the option is exercised, the interest equal to difference of the two rates (market and exercise) is paid buy the seller to buyer of the option at the end of interest period. As this cash flow happens at the end of the period and the question is what is the value of that cash flow now, you need to discount it to exercise date.

in case of FRA, it is settled at the beginning and the amount is the discounted interest difference. (just fyi there are also other types of iro (so called interest rate guarantees) which are settled also at the beginning of interest period)