How to plot the bond price; Error incorrect dimensions

Hi, I'm trying to plot a bond price over the yield curve but I keep getting an error:

Here is my code:

fighandle = figure(1);
fighandle.Position(3) = 800;
axeshandle = axes;
axeshandle.YLim = [0 inf];

x = 1:0.1:7;
yield = ones(1,50) * x;                 % yield curve
T = length(yield); 
r=0.03;                                 % initial yield rate
Par=1000;                               % par value
coupon=r.*Par;                          % coupon payments
cc=zeros(1,T)+coupon;                   % vector of cash flows 
cc(50)=cc(50)+Par;                      % add par to cash flows
P = sum(cc./((1+yield./100).^(1:T)))    % calculate bond price

plothandle = plot(axeshandle,x,P)

Any help/suggestion would be appreciated. Thanks

[dpb]

>> x = 1:0.1:7;
yield = ones(1,50) * x;    
Error using  * 
Inner matrix dimensions must agree. 
>> whos x
  Name      Size            Bytes  Class     Attributes

  x         1x61              488  double              

>> 

You defined x such as it is of length()==61 but then tried a matrix multiply of ones(1,50).

Why? What do you expect yield to start off as?

[Huy Nguyen Ba]

Thanks for the response. I wanted yield to be a vector with each of its 50 elements being the same value. I thought that my code would take one element of x at the time, and calculate the corresponding P value; then plotting the point (x,P) to the axeshandle and doing the same with the next element in the x vector

[dpb]

But, you defined 61 x values, not 50 plus the matrix multiplication request.

If you want the initial yield to be1.0 for all x, then just

yield=ones(size(x));

is all you need and the sizes are going to be commensurate regardless of what x values you choose.

But the use later on doesn't indicate that should be but that maybe it is intended to be the x/100 percent?

If that is the case, then just write

yield=x/100;

and then you can take the /100 out of the expression later on of (1+yield).

[Huy Nguyen Ba]

Sorry that I didn't explain my problem well. The initial purpose of the code was to just calculate the bond price P for a given flat yield curve consisting of 50 x-Values, e.g. for x=3(%) the output P should be 1000. Then I wanted to visualize the price behavior for parallel shifts in the yield curve (3% to 1% or 3% to 5% etc.). So I decided that x should accept values from 1 to 7 (the increment of 0.1 I've picked randomly). But I wasnt able to create a plot.

I hope that I have expressed my intention more clearly.

[KALYAN ACHARJYA]

@Huy nguyen please re-read the comnents by @dpb, after resolving the issue (Matrix multiplication sizes), there will issue in

 cc(50)=cc(50)+Par;    

[Ruchir Dhiman]

All operations on matrices require the matrix dimensions to be compatible.

I would suggest that, before plotting the results, just write the dimensions of the matrices which you are using to represent your data. And make sure that the dimensions of any auxiliary matrices you create are compatible.

For reference, you cannon multiply (M1 * M2) a matrix with dimensions m x n (m rows, n columns) with a matrix with dimension a x b (a rows, b columns) if n is not equal to a.

Similarly, if you are using .* or ./ on 2 matrices, then the dimensions should be equal i.e m=a and n=b. Otherwise you will get another error.

Edit - You mentioned that you just picked 0.1 randomly.

Try using x = linspace(1,7,50) instead of x = 1:0.1:7

It will give you 50 equally-spaced elements between 1 and 7 (both inclusive).

[Huy Nguyen Ba]

I got it now. Thank you all for your help.