The correct answer is D) The free surface correction decreases as the draft increases due to loading dry cargo. The free surface correction accounts for the reduction in vessel stability caused by liquid sloshing in partially filled tanks. As the draft increases due to loading dry cargo, the free surface effect decreases because the liquid volume in the partially filled tanks becomes a smaller percentage of the total vessel volume. Therefore, the free surface correction applied to the vessel's stability calculations will be smaller at deeper drafts compared to lighter drafts. The other answer choices are incorrect: A) Incorrect, the free surface correction is independent of the location of the slack tank relative to the KG. B) Incorrect, the free surface correction is always subtracted from GM, not added. C) Incorrect, the free surface correction is increased if the slack tank is on the centerline, not if it is off-center.