The correct option is A The magnitude of magnetic moment now diminishes.
For a circular loop of radius R carrying current, I placed in x−y plane, the magnetic moment M=IπR2. It acts perpendicular to the loop i.e., along with the z-direction. When half of the current loop is bent in y-z plane, the magnetic moment due to half current loop in x-y plane,M1=I(πR22) acting along z-direction.
Magnetic moment due to half current loop in y-z plane,M2=I(πR22) along x-direction.
Effective magnetic moment due to entire bent current loop,
M′ =√M21+M22=√(IπR22)2+(IπR22)2
M′=IπR22√2<M
i.e., magnetic moment diminishes.