Correct Answer - Option 3 : knows what really happened
The correct answer is Option 3.
The error lies in the 3rd part of the sentence
This is a conditional sentence, and 'would' indicates the consequence of an imagined situation. It hence takes the verb in the simple past tense.
The 3rd person singular form is wrong. It should rather read as knew what really happened.
The correct sentence will be: How amused everyone would be if they knew what really happened.
