Question: Note: Don't copy from the internet sources Black-Scholes-Merton formula uses five variables to calculate the price of call and put options. Explain each of these

Note: Don't copy from the internet sources

Black-Scholes-Merton formula uses five variables to calculate the price of call and put options. Explain each of these variables incorporated in Black-Scholes-Merton formula. Show how the change in these variables affects the price of option. Show how these variables are grouped to show put-call parity relationship and suggest the condition in which there is an arbitrage opportunity.

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