Correct Answer - Option 3 : Fundamental as well as transient component of the fault current
The Impedance relay is so designed that it closes its contacts whenever impedance of the protected section falls below the set value i.e. Z in this case. Under threshold condition,
\({Z_{set}} = \sqrt {\frac{{{K_1}}}{{{K_2}}}} \)
Where, K1 & K2 are constants.
When relay is operating,
Zseen < Zset
The condition Zseen < Zset, occurs when the fundamental component of the fault current is flowing. The impedance reduces and the relay is triggered.