Arousal from watching an unsuspecting person naked or engaging in sexual activity is known as?

The condition described in the question refers specifically to voyeurism, a paraphilia characterized by the act of gaining sexual excitement from observing an unsuspecting individual who is naked or engaged in sexual activities. This behavior involves a lack of consent from the observed individual, distinguishing it from other forms of sexual arousal.

Voyeurism can manifest in various ways, including watching others through a window or from a distance, and it typically involves a desire to maintain secrecy and anonymity. It is classified as a paraphilic disorder when it causes distress or impairment to the individual or when acted upon with non-consenting individuals.

The other terms listed do not relate to this behavior. Hypochondriasis involves health anxiety and an excessive preoccupation with having a serious illness. Sexual masochism refers to deriving pleasure from being humiliated, hurt, or otherwise made to suffer, which is quite different from the act of observing others. Conversion disorder is associated with psychological distress manifesting as physical symptoms, unrelated to sexual arousal or voyeuristic behavior. Thus, the understanding of voyeurism as a distinct and defined paraphilia underpins the correctness of the chosen answer.