The speed of the wave in a string is given by:
\[
v = \sqrt{\frac{T}{\mu}}
\]
where \( T \) is the tension in the string and \( \mu \) is the mass per unit length.
According to Hooke's law, the tension \( T \) is directly proportional to the elongation of the string. So, if the length of the string increases, the tension increases in proportion to the elongation.
Given that the elongation is increased from \( \frac{L}{20} \) to \( \frac{L}{10} \), the tension increases by a factor of \( \frac{L}{10} \div \frac{L}{20} = 2 \).
Since the speed of the wave is proportional to the square root of the tension, the speed of the wave increases by a factor of \( \sqrt{2} \).
Thus, the speed of the wave when the string is stretched by \( \frac{L}{10} \) will be \( v\sqrt{2} \).
Therefore, the correct answer is option (3), \( v\sqrt{2} \).