What part of speech does the word in capital letters play in this sentence?
many students taunt each other by making fun of another person's appearance or behavior.
-adjective
-adverb
-noun
-verb

The answer is Verb . . .

Verb is a word that used to describe an action/activity that someone do to a recipient.

In this case, the one who do the action is Students,

the action  itself is Taunt

And the recipient is "each other"

I hope it helps,

The word taunt is used as a verb here - it is used to denote the action which is taking place in this sentence.