Statement-I: Lactose is composed of \( \alpha \)-D-glucose and \( \beta \)-D-glucose.
Lactose is a disaccharide composed of one molecule of D-galactose and one molecule of D-glucose.
Specifically, it is formed by a \( \beta \)-1,4 glycosidic linkage between \( \beta \)-D-galactose and D-glucose (which can be \( \alpha \) or \( \beta \) anomer form at its anomeric carbon if free).
The glucose unit is typically \( \beta \)-D-glucose in the most stable form of lactose, but the key components are galactose and glucose, not two glucose units.
Therefore, Statement-I is not correct.
Statement-II: Lactose is a reducing sugar.
A reducing sugar is a carbohydrate that is capable of acting as a reducing agent because it has a free aldehyde group or a free ketone group, or can tautomerize in solution to form one.
This usually means it has a free hemiacetal or hemiketal group.
In lactose (\( \beta \)-D-galactopyranosyl-(1\( \rightarrow \)4)-D-glucopyranose), the anomeric carbon (C1) of the galactose unit is involved in the glycosidic bond.
However, the anomeric carbon (C1) of the glucose unit is free (it has a hemiacetal group).
This free hemiacetal group can open up to form an aldehyde group, making lactose a reducing sugar.
Lactose gives positive tests with Benedict's reagent and Tollens' reagent.
Therefore, Statement-II is correct.
Conclusion: Statement-I is not correct, but Statement-II is correct.
This matches option (4).