I actually believe that the answer is D.
I think the only thing CSR sees when you call to cancel is "ticketed on May 02", therefore you have until 11:59 pm on May 03 to cancel the ticket for free.
After logging into my AA acct, I can not see the exact time I made the purchase, nor can I see the exact time the ticket was issued, all I see is the "ticketed on" date. I think the CSR probably sees the same thing, and that's why they allow you to cancel for free until 11:59 pm the next day, because the CSR does not have the exact time the ticket was issued either, so they go by date.