The correct answer is B. both (i) and (iv).
The altitude bubble is used to level the theodolite. The theodolite is leveled by making the altitude bubble centered in its vial. The altitude bubble is located on the index frame and the telescope. To level the theodolite, the altitude bubble on the index frame is centered first. Then, the altitude bubble on the telescope is centered. This ensures that the theodolite is level in both the horizontal and vertical planes.
If the altitude bubble is only provided on the index frame, then the theodolite can only be leveled in the horizontal plane. If the altitude bubble is only provided on the telescope, then the theodolite can only be leveled in the vertical plane. However, if the altitude bubble is provided on both the index frame and the telescope, then the theodolite can be leveled in both the horizontal and vertical planes.
Therefore, the correct answer is B. both (i) and (iv).