A paper is folded and cut as shown below. How will it appear when unfolded?

When the  paper is unfolded for the first time, two semicircles will be present at the bottom and a circle will be present in the middle. Also two arrows will be present in opposite directions.

When it is unfolded for the second time(full paper), the semicircles of above step will become two circles and another circle will be present in the middle of the unfolded area.Again the two arrows will be present in opposite directions in the unfolded area.

which looks like:

so option B is the answer.