A commercial bank recognizes that its net income suffers whenever inerest rates increase. Which of the following strategies would protest the bank against rising interest rate?
1. Purchase principal only (PO) strips that decline in value whenever interst rate rise.
2. Enter into a short hedge where the bank agrees to sell interest rate futures.
3. Sell some of the bank's floating-rate loans and use the proceeds to make fixed-rate loans.
4. Buying inverse floaters.
5. Enering into an inerest rate swap where the bank receives a fixed payment stream, and in return agrees to make payments that float with market inerest rates.