What is the primary limitation of Distance Measuring Equipment (DME) indication, and under what condition is this error greatest?

1. Slant range error; it is greatest when the aircraft is at high altitude directly over or very close to the DME station.
2. Groundspeed error; it is greatest when the aircraft is flying in a strong headwind.
3. Line-of-sight blockage; it is greatest when the aircraft operates at low levels over water.
4. Time delay error; it is greatest when multiple aircraft interrogate the transponder simultaneously.