What forms the Fe K-alpha line?
Most models cite a small fraction of the hard X-ray continuum “back-illuminating” the disk, exciting the ions to form the Fe K-alpha line. The same hard X-rays may also Compton down-scatter to produce a “Compton Reflection Hump” at high energies. The location of the Fe K-alpha line is still intensely studied, since narrow Fe K-alpha seems to be the rule rather than the exception (see Bianchi et al. 2004, A&A 422, 65); no observations can yet resolve these narrow lines, so it’s difficult to tell what their broadening is, and therefore, where they’re produced, although most of the emission seems to come from neutral Fe in Compton-thick material, and in most Seyferts, the line is not broadened, so it must lie beyond approximately 20 R_g.