You created Vnet2 in West US and will peer it with an existing Vnet1 that contains VM1, VM2 and a load balancer LB1. Virtual machines in Vnet2 must be able to reach VM1 and VM2 through LB1. Which action will allow VMs in Vnet2 to connect to VM1 and VM2 via LB1?

The correct answer is to change the SKU of LB1. Azure Basic Load Balancers do not support VNet Peering by default. To allow traffic from a peered VNet to reach backend VMs through a load balancer, the load balancer must be a Standard SKU. Standard Load Balancers fully support VNet Peering. Setting 'Traffic forwarded from remote virtual network' to Allow in either Vnet2 or Vnet1 peering settings is necessary for traffic to flow across the peering, but it won't resolve the underlying limitation of a Basic Load Balancer. Floating IP configurations are used for direct server return scenarios and are not related to enabling VNet peering support for a load balancer.