Step 1: Applying Probability Formula.
The event we are looking for is the occurrence of the second win in the third match, which means the first two tests should be losses and the third one should be a win. The probability of this event is:
\[
P = \left( \frac{1}{2} \right)^3 = \frac{1}{8}
\]
Step 2: Conclusion.
The correct answer is (A), \( \frac{1}{8} \).