Step 1: Understanding the magnetic moment of a bent wire.
The magnetic moment of a straight wire is given by \( M = I \times A \), where \( I \) is the current and \( A \) is the area of the loop. When the wire is bent into an 'L' shape, the magnetic moment becomes:
\[
M_{\text{bent}} = \frac{M}{\sqrt{2}}
\]
Thus, the correct answer is (A) \( \frac{M}{\sqrt{2}} \).