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error: 'y' undefined near line 8 column 12 

error: called from computeCost at line 8 column 3

Here is my code:

1;

function J = computeCost(X, y, theta)

%COMPUTECOST Compute cost for linear regression

%   J = COMPUTECOST(X, y, theta) computes the cost of using theta as the

%   parameter for linear regression to fit the data points in X and y



% Initialize some useful values

m = length(y); % number of training examples



% You need to return the following variables correctly 

J = 0;



% ====================== YOUR CODE HERE ======================

% Instructions: Compute the cost of a particular choice of theta

%               You should set J to the cost.



J = sum(( X * theta - y ) .^2 )/( 2 * m );







% =========================================================================



end

There are two things happening here. First you are defining your function dynamically as opposed to in its own file; not sure why you would prefer that.

Second, after having defined this computeCost function, you are calling it from a context where you did not pass a y argument (or presumably, you didn't pass any arguments to it, and y happens to be the first one detected as missing inside the function).

Since this is a cost function and your code looks suspiciously like code from Andrew Ng's Machine Learning course on Coursera, I am going to go out on a limb here and guess that you called computeCost from something else that was supposed to use it as a cost function to be optimised, e.g. fminunc. Typically functions like fminunc expect a function handle as an argument, but they expect a very specific function handle too. If you look at the help of fminunc, it states that:

FCN should accept a vector (array) defining the unknown variables,

and return the objective function value, optionally with gradient.

Therefore, if you want to pass a function that is to be computed with three arguments, you need to "wrap" it into your own handle, which you can define on the spot, e.g. @(x) computeCost(x, y, t) (assuming 'y' and 't' exist already).

So, I'm guessing that instead of calling fminunc like so: fminunc( @(x) computeCost(x, y, t),

you probably called it like so: fminunc( @computeCost )

or even like so: fminunc( computeCost ) (which evaluates the function first, rather than pass a function handle as an argument).

Basically, go back to the code given to you by coursera, or read the notes carefully. You're calling things the wrong way.