SAT math practice question: Factors of algebraic terms

 
Try the following SAT math practice question (No Calculator) that tests your understanding of factorization and algebraic identities.

Question(No Calculator):

Which of the following must be a factor of both $x^4-y^4$ and $x^3y – x y^3$ ?

1. $x + y$
2. $x^2 – y^2$
3. $(x-y)^2$

1. $\quad \textrm{II only}$
2. $\quad \textrm{I and II only}$
3. $\quad \textrm{I and III only}$
4. $\quad \textrm{I, II, and III}$