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Hello, Right now I am getting a matrix at the end but all the values in each row are the same. Im not sure why this is happening. My results matrix is right but the unhedged and hedged are doing this error.

k_g = [0.66, 0.65, 0.64, 0.63, 0.62, 0.61, 0.60, 0.59, 0.55];

c_g = [0.085855 0.032191 0.020795 0.017001 0.013711 0.010851 0.008388 0.006291 0.001401];

k_b = [1.30, 1.25, 1.20, 1.15, 1.10, 1.05, 1.00, 0.95, 0.90];

c_b = [0.137213 0.082645 0.045060 0.028338 0.016146 0.007860 0.003277 0.001134 0.000245];

results_G = zeros(length(k_g), length(c_g));

results_B = zeros(length(k_b), length(c_b));

unhedged_G = zeros(length(k_g), length(c_g));

unhedged_B = zeros(length(k_b), length(c_b));

Eg = 643000000;

Eb = 272000000;

corr = 0.675;

n = 100000;

Rg = normrnd(0,9,[n,1]);

Rb = normrnd(0,11,[n,1]);

for j = 1:length(c_g)

for i = 1:length(k_g)

G = 0.6531*(1+Rg(i)/100);

netpayoff_g = (k_g(i)-G)-c_g(j);

results_G(i,j)= netpayoff_g;

unhedged_G(i,j)=Eg.*G;

end

j=j+1;

end

for b = 1:length(c_b)

for a = 1:length(k_b)

B = 1.234*(1+Rb(a)/100);

netpayoff_b = (k_b(a)-B)-c_b(b);

results_B(a,b)= netpayoff_b;

unhedged_B(a,b)= Eb.*B;

end

b=b+1;

end

hedged_G = unhedged_G + (9.*results_G)

hedged_B = unhedged_B + (9.*results_B)

hedged = hedged_G + hedged_B

results_G

results_B

best_G = max(results_G(:))

best_B = max(results_B(:))

jessupj
on 16 Sep 2020

it might simply LOOK like the numbers are the same because Eg and Eb are large and the answer is displayed in scientific notation. try looking at the results after you run

format long g

Sai Sri Pathuri
on 22 Sep 2020

You may try the following:

Create Rg and Rb as matrices with same length as results matrices

Rg = normrnd(0,9,[length(k_g), length(c_g)]);

Rb = normrnd(0,11,[length(k_b), length(c_b)]);

For the calculation of unhedged_G, define G as

G = 0.6531*(1+Rg(i,j)/100);

For the calculation of unhedged_B, define B as

B = 1.234*(1+Rb(a,b)/100);

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