Finite state machine

Question

Consider the finite state machine described by the following state transition diagram. Σ = {0,1},∆ = {00,01,10,11}
M=({A,B,C},{0,1},{00,01,10,11},δ,λ,A)

(Note: Assume that there is an extra 0 attached at the left most end of the string. For example, if the string is 100, we consider it as 0100.)
Identify the correct statement.

1.   None of the above.
2.   Outputs 10 whenever the input sequence contains 01.
3.   Outputs the concatenation of present and previous bits in the input string.
4.   Outputs 00 whenever the input sequence contains 10.

Answer 1

option (2) seems to be correct