n . . Eff rate
1 . . 0.03 (annual)
2 . . 0.030225 (semi-annual)
4 . . 0.030339191 (quarterly)
12. . 0.030415957 (monthly)
Rounded to 2 digits, percentage-wise, the answer is Monthly (compounded 12 times per year) or (d)
But if you want to know how many times per year that 3% is compounded to obtain EXACTLY 3.04%, then you have to solve the following equation for n:
(1 + r/n) ^ n - 1 = z
That is,
(1 + 0.03/n) ^ n - 1 = 0.0304
The only way to do that is by iterations. Doing so, you get 8.41 times per year. So the answer is (e), none of the above.
So is 3.04% rounded or not?
{obviously not annual.} (1 + .03/n)^(1yr * n) = 1.0304 ... and compute each case
EDIT: Either this is from / on a very tricky exam, or it is rounded (which was my assumption = d)
mcacquire gets my thumbs up for thinking about it harder.