When a forward bias is applied to a p-n junction diode, then :

The correct answer is option (4)

Concept:

Forward Bias:

• When forward biased, the applied voltage V of the battery mostly drops across the depletion region and the voltage drops across the p-side and n-side of the p-n junction is negligibly small.
• In forward biasing the forward voltage opposes the potential barrier Vbi. As a result, the potential barrier height is reduced and the width of the depletion layer decreases.
• As forward voltage is increased, at a particular value the depletion region becomes very much narrow such that a large number of majority charge carriers can cross the junction.
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Explanation:

• When a forward bias is applied to a p-n junction diode, the potential barrier at the junction is reduced.
• This allows current to flow easily across the junction. Electrons from the N-type material and holes from the P-type material move across the junction and recombine, releasing energy in the form of light or heat.
• As a result, the potential barrier height is reduced and the width of the depletion layer decreases.
• The current flows from the P-type material to the N-type material, and the diode has a low resistance to the flow of current. In essence, the forward bias allows the diode to conduct electricity, which is why it is commonly used as a rectifier to convert AC to DC.

Additional Information 

Reversed Bias:

• When reverse biased, more charge carriers are depleted, resulting in the widening of the depletion region. 
• This increases the opposing electric field for the diffusion carriers and does not allow them to cross the junction, offering a high resistance 

This can also be understood with the VI characteristic of a p-n junction diode: