The correct answer is the one which the exam paper expects!! It doesn't have to be right.
As for e.g. 123.75 or 123.750, I think all ATCOs speak it as 123.75.
Similarly, 123.8 is spoken as 123.8 but I say it as 123.80.
The difference appears on say 120.225 which some speak as 120.22 and others as 120.225. On a real radio this is unambiguous when you come to actually set it.
125.875 looks like an 8.33 frequency but again it is unambiguous on a real 8.33 radio if you just tell somebody to set 125.87. The difference on an 8.33 radio is that it actually displays all six digits so 120.225 and 125.875 will both show in full, whereas a non-8.33 radio will show the former as 120.22 and one obviously cannot select the latter.