In this direct and indirect speech question, select the option that correctly reports the statement: He said, "This is a bad idea."

Introduction / Context:
This question focuses on reporting a simple evaluative statement from direct speech to indirect speech. The original sentence expresses a negative opinion about an idea. To convert it into reported speech, we need to select the correct pronoun to refer to this and apply tense rules properly. Such questions test your understanding of demonstratives and linking verbs in reported speech.

Given Data / Assumptions:

• Direct sentence: He said, "This is a bad idea."
• Reporting verb: said, which is in the simple past tense.
• Demonstrative pronoun: this, referring to some idea already known from context.
• Linking verb: is, describing the state of the idea.
• We assume the statement is being reported later by another person.

Concept / Approach:
In indirect speech, we often change this to that or it, depending on smoothness and context. Also, when the reporting verb is in the past, present tense is usually changed to past tense, so is becomes was. The structure He said that it was a bad idea is natural and follows both these principles. The pronoun it conveniently refers back to the idea without repeating that that, which can sound awkward. We must also introduce the clause with that for a formal reported speech construction.

Step-by-Step Solution:
Step 1: Keep the reporting clause He said as it is. Step 2: Add that to introduce the reported clause: that this is a bad idea. Step 3: Replace this with it to avoid repetition and to refer to the previously mentioned idea. Step 4: Change is to was to follow the sequence of tenses rule after a past reporting verb. Step 5: Confirm that the phrase a bad idea remains unchanged to preserve the original opinion.

Verification / Alternative check:
The final reported sentence is: He said that it was a bad idea. This sentence keeps the meaning, uses natural pronoun substitution, and applies correct tense backshift. It reads smoothly in standard English and is exactly the type of answer examiners expect when they design questions on reporting evaluative statements like this one.

Why Other Options Are Wrong:
Option A is grammatically possible but uses that that, which sounds awkward and is not as natural as using it for the idea.
Option B is incorrect because it keeps this rather than changing it, which is less appropriate in many exam keys when reporting a past statement.
Option D is incorrect because said this that was a bad idea is an unnatural and clumsy structure for indirect speech.
Option E is incorrect because it keeps is instead of changing it to was, not following the standard tense backshift rule after a past reporting verb.

Common Pitfalls:
Students often struggle with demonstrative pronouns in reported speech and may leave this unchanged when it should be changed to that or it. Another typical mistake is failing to backshift the tense of the verb to match the past reporting verb. Some learners also try to carry the exact words into indirect speech, forgetting that indirect speech focuses on meaning rather than exact wording. Always check that the pronoun fits the new context and that the verb tense matches the time relationship implied by the reporting verb.

Final Answer:
He said that it was a bad idea.