let assume ,
y=$\lim_{n->\infty}(1-\frac{1}{n^{2}})^{n}$
taking log both side,
$\ln y=\lim_{n->\infty}n\ln (1-\frac{1}{n^{2}})$
let us assume z=1/n , so as $n->\infty$ ,z->0.
$\ln y=\lim_{z->0} \frac{\ln (1-z^{2})}{z}$
it is now is in $\frac{0}{0}$ form , so we can use L’Hopital rule,
$\ln y=\lim_{z->0}\frac{-2z}{1-z^{2}}$
$\ln y=0$
$y=1$
so correct is (D).