Concept:
For weak electrolytes,
\[
\boxed{\alpha=\frac{\Lambda_m}{\Lambda_m^\circ}}
\]
where
\[
\Lambda_m=\frac{1000\,\kappa}{C}
\]
Step 1: Calculate molar conductivity.
Given,
\[
\kappa=5\times10^{-5}\ \mathrm{S\,cm^{-1}}
\]
\[
C=0.001\ \mathrm{M}
\]
\[
\Lambda_m
=
\frac{1000\times5\times10^{-5}}{0.001}
=
50\ \mathrm{S\,cm^2\,mol^{-1}}
\]
Step 2: Calculate degree of dissociation.
\[
\alpha
=
\frac{50}{390.5}
=
0.128
\]
Step 3: Final conclusion.
\[
\boxed{\alpha=0.128}
\]
Hence, the correct option is \(\boxed{(B)}\).