Capital Account Convertibility means that a currency can be easily converted or exchanged into another major currency without any governmental restrictions for the purpose of trading in financial assets including stocks, bonds, or assets. This is irrespective of the nature of the transaction, whether it`s for financial or investment purposes.
Option 1 and 2 are incorrect as they refer to Current Account Convertibility, which allows free conversions for trade in goods and services, but not financial assets.
Option 3 is the correct answer as it correctly states what Capital Account Convertibility implies for the Indian Rupee - that it can be exchanged for any major currency for purposes of trading in financial assets.
Option 4 is incorrect because Capital Account Convertibility does imply the definition presented in option 3.