Illustrates Black–Scholes Equation with an example

Illustrates Black–Scholes Equation with an example?

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The basic equation is

∂V/∂t + ½ σ2S2/∂2V∂S2+ rS ∂V/∂S- rV = 0,

Here V(S, t) is the option value like a function of asset price S and time t. There have been many extensions to such model; several people call them 'improvements.' although these extensions are all trivial compared along with the breakthrough in modelling which was the original equation.

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