MATLAB: Common error message: “Index exceeds matrix dimensions”

Question

Hello dear MATLAB users from the community, I am having few trouble programming an objective function for my master thesis and hope someone could help me out with this. What I need to do, is to solve a classic least squares minimization problem, where the objective function is calculated within a function and then passed to the main script.

This is the code for the main script:

clc;
clear;
tic 
% necessary inputs for the SV Objective function
S=xlsread('NDX_calls_dati','<60 days','B1');
K=xlsread('NDX_calls_dati','<60 days','D4:D14')';
tau=xlsread('NDX_calls_dati','<60 days','C4:C14')';
Market_Price=xlsread('NDX_calls_dati','<60 days','E4:E14')';
V=xlsread('NDX Dollar Price History','18 years','M22');
R=0.0216; % 4 WEEKS rf at 31/10
NK=length(K);
NT=length(tau);
k_v = 1.15; theta_v = 0.04; sigma_v= 0.39;  rho= -0.64; 
[ Loss_SV ] = SV_ObjFun( NK, NT, Market_Price, S, K, R, V, k_v,...
                            theta_v, sigma_v, rho, tau )
toc

The "SV_ObjFun" is structured as follows:

function [ y ] = SV_ObjFun( NK, NT, Market_Price, S, K, R, V, k_v,...
                            theta_v, sigma_v, rho, tau )
                        
% The function implements the loss function for the SV specification
% see: Fabrice D. R - The Heston Model and Its Extensions in Matlab and C#
%                     pp 149-150
% Set of NT maturities, NK strikes
% S, K(k), R, V, k_v, theta_v,sigma_v, rho, tau(k),NExp
% specify the parameters inside
% NT and NK have equal dimensions 
for t = 1: NT
    for k = 1:NK
 
        Model_Price(t,k) = Call_SVMC(S, K(t), R, V, k_v, theta_v, sigma_v,...
                               rho, tau(t),1000); % NExp chosen by user      
        
        % compute the error from market and model prices for each iteration 
        error(t,k) = (Market_Price(t,k)-Model_Price(t,k))^2; 
    end
end
y = sum(sum(error))/(NT*NK); 
end

As I run the code to calculate the loss "Loss_SV", the error pops out:

Index exceeds matrix dimensions.

Error in SV_ObjFun (line 19)

error(t,k) = (Market_Price(t,k)-Model_Price(t,k))^2;

Can anyone please help me understand what's happening and how to solve it? Thank you in advance.

Answer 1

"Market_Price" is a one-dimensional array ; you try to access "Market_Price(t,k)".