"When interest rates are high you want the average direction in which interest rates are moving to be downward; when interest rates are low you want the average direction to be upward"

This quote by John C. Hull is describing the concept of rates of interest threat. Rates of interest danger is the danger that an investment's worth will certainly lower due to an adjustment in rate of interest. When rate of interest are high, capitalists want the typical direction of interest rates to be downward, as this will certainly cause a decline in the expense of loaning as well as an increase in the worth of their investments. On the other hand, when interest rates are low, investors desire the average instructions of rate of interest to be upward, as this will certainly lead to a boost in the cost of loaning as well as a decrease in the worth of their investments. This quote is a suggestion that investors must constantly recognize the direction of interest rates and just how it can affect their investments.