Stress only appears if a body is stopped from freely reaching its natural expanded (or contracted) shape. Here, nothing stops the bar's ends from moving outward as it heats up.
So the bar develops no stress when heated while free to expand.
A third way to see this is by separating total strain into a thermal part and a mechanical part, and applying the stress-strain law only to the mechanical part.
The total strain of the bar is \( \varepsilon_{\text{total}} = \varepsilon_{\text{thermal}} + \varepsilon_{\text{mechanical}} \), where \( \varepsilon_{\text{thermal}} = \alpha \Delta T \) is the strain due to the temperature rise alone, and \( \varepsilon_{\text{mechanical}} \) is the strain associated with any actual stress via \( \sigma = E\,\varepsilon_{\text{mechanical}} \). Since the bar is free to expand, its actual length change equals exactly the thermal expansion, i.e., \( \varepsilon_{\text{total}} = \varepsilon_{\text{thermal}} \), which forces \( \varepsilon_{\text{mechanical}} = \varepsilon_{\text{total}} - \varepsilon_{\text{thermal}} = 0 \).
Splitting the strain into thermal and mechanical parts confirms mathematically that zero mechanical strain means zero stress.
Therefore, the correct answer is no stress is developed.
A steel wire of $20$ mm diameter is bent into a circular shape of $10$ m radius. If modulus of elasticity of wire is $2\times10^{5}\ \text{N/mm}^2$, then the maximum bending stress induced in wire is: