In this direct and indirect speech question, select the option that correctly reports the exclamatory statement: My wife said to me, "This is a beautiful necklace!"

Introduction / Context:
This question checks your knowledge of how to change an exclamatory statement in direct speech into indirect speech. The original sentence shows admiration expressed by a wife about a necklace. When changing such sentences into reported speech, you must focus on the correct reporting verb, replacement of demonstratives like this, and proper sequence of tenses. These details are very important in exams that test English grammar and usage, especially in the area of reported speech.

Given Data / Assumptions:

• Direct sentence: My wife said to me, "This is a beautiful necklace!"
• Reporting verb: said to, with an object me.
• The sentence expresses admiration about a necklace using the simple present tense is.
• The demonstrative pronoun this is used to point to something near in place or time.
• The context suggests a past report of what the wife said at an earlier moment.

Concept / Approach:
When we change such sentences into indirect speech, we usually convert said to into told when an object is mentioned. The linking verb is in the reported clause often changes to was if the reporting verb is in the past tense. For demonstratives, this generally becomes that, or in some versions it becomes it when referring to a single object already known in the context. We also remove the exclamation mark and report the feeling as a simple statement. The structure My wife told me that it was a beautiful necklace is a natural and grammatically correct way to report the original remark.

Step-by-Step Solution:
Step 1: Identify the reporting clause: My wife said to me. Step 2: Change said to me into told me in reported speech, because there is a direct object. Step 3: Introduce the reported clause with that: that this is a beautiful necklace. Step 4: Replace this with it, since the necklace is a specific item already known to both speakers. Step 5: Backshift the simple present is to the simple past was, resulting in that it was a beautiful necklace.

Verification / Alternative check:
The final sentence becomes: My wife told me that it was a beautiful necklace. It keeps the meaning of admiration, uses the correct reporting verb, and respects the expected tense change. The use of it helps avoid repetition of that that, which can sound awkward, and the past tense was matches the past reporting verb said. Read the sentence to ensure that it sounds natural and clearly reflects the original idea without exclamatory punctuation.

Why Other Options Are Wrong:
Option B is grammatically possible but slightly awkward due to that that and is less natural than using it, so it is not the best choice in a test where only one option is preferred.
Option C is incorrect because the structure this that was a beautiful necklace is not idiomatic English and creates unnecessary repetition.
Option D is incorrect because it mixes that that with is, keeping the present tense where a past tense would normally be expected after a past reporting verb.
Option E is incorrect because it keeps the present tense is, which does not follow the standard backshift rule in many examination keys when the context is a past report.

Common Pitfalls:
One common mistake is to leave this as this in reported speech rather than changing it to that or it. Another frequent error is ignoring the sequence of tenses and keeping the verb in the present tense even when the reporting verb is in the past. Some learners also try to carry over the exclamatory tone directly, but in reported speech we normally report the content as a statement. To avoid these errors, always pay attention to demonstratives, linking verbs like is, and the overall tone of the original sentence that you are reporting.

Final Answer:
My wife told me that it was a beautiful necklace.