A bank has a mismatch in the duration (maturity structure) of its assets and liabilities, leaving it vulnerable to interest rate risk. Describe the interest rate risk, including a definition of an interest rate squeeze. Explain how the bank can use the following instruments to minimize interest rate risk.

(a) interest rate swap

(b) futures contract

(c) options

(d) loan sale/purchase

Describe the impact of the different strategies on the balance sheet of the bank. Describe the impact if interest rates rise, fall, or remain constant.