Explanation:

• Option A is incorrect because arbitrageurs actually improve liquidity by facilitating trades across different markets, making it easier for buyers and sellers to transact.
• Option B is incorrect because arbitrageurs help eliminate pricing discrepancies quickly, thereby reducing inefficiencies rather than increasing them.
• Option C is correct because arbitrageurs capitalize on pricing discrepancies (market inefficiencies) to generate profits. Their actions help align prices across markets, thereby contributing to overall market efficiency. The presence of arbitrageurs ensures that pricing discrepancies are resolved swiftly, promoting a more efficient market environment.

Reference: Equity Investments - Factors affecting market efficiency.