The correct option is C Amount of water displaced by object B is less than its weight.
When the weight of liquid displaced by an object is equal to its own weight, the buoyant force acting on it balances its weight. This way, an object floats.
If the weight of the liquid displaced by the object is less than its weight, it sinks.
Here as the object A is floating, the amount of water displaced by it needs to be equal to its weight. Whereas, the amount of water displaced by object B needs to be less than its weight.