How does Conversion Optimizer determine the optimal cost-per-click (CPC) bid?

How does Conversion Optimizer determine the optimal cost-per-click (CPC) bid?

  A)  It uses your conversion history to bid higher when a conversion is more likely
  B)  It sets CPC bids as one-tenth the current CPA bid setting
  C)  It only allows CPC bids lower than the current CPA bid setting
  D)  It bids a static CPC value based on current max. CPC settings