A stretched rubber has:
(A) Increased kinetic energy
(B) Increased potential energy
(C) Decreased kinetic energy
(D) Decreased potential energy

Hint: A body tends to remain to a point of minimum potential energy, and when displaced, tends to return at that minimum potential energy. When there are no energy losses in the system, a body with higher potential energy has a low kinetic energy, and a body with low potential energy has a high kinetic energy. One has a maximum value when the other is zero.

Complete step by step answer
In general, when a rubber is stretched, we oppose the normal state of the rubber. The atoms of the material as a result of their inter-atomic interaction are at a distance from each other, hence creating a particular length of the rubber. When this distance is opposed by stretching, the atoms tend to go back to their original distance apart, hence, the original length. Usually, a body tends to remain at a point of lowest potential energy, hence, energy must be put into (or work must be done on) the system to increase its potential energy.
Now, since potential energy is the energy possessed by a body as a result of its position, hence, we can conclude that due to the new position of the atoms of the stretched rubber, they have acquired potential energy.

Hence, the correct answer is B.

Note
Another pattern of reasoning could be that: after doing work on the rubber to stretch it, what happens when we release it. The rubber accelerates back to its original position, getting to a maximum velocity at the original position. By the conservation of energy theorem, the potential energy possessed by it initially must have been converted to kinetic energy.