Arbitrage occurs when investors try to profit from situations where two identical assets have different rates of return. Thus, the correct option for this question is B.
Arbitrage may be defined as the simultaneous purchase and sale of the same asset in different markets in order to profit from tiny differences in the asset's listed price.
It is a situation where a trader can profit from the imbalance of asset prices in different markets. The simplest form of arbitrage is purchasing an asset in a market where the price is lower and simultaneously selling the asset in a market where the asset's price is higher.
Therefore, arbitrage occurs when investors try to profit from situations where two identical assets have different rates of return. Thus, the correct option for this question is B.
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