What device monitors traffic by terminating connections in both directions?

The correct answer is a proxy. A proxy server acts as an intermediary between clients and servers, monitoring and controlling traffic between the two. It terminates connections from both directions, meaning it establishes its own connection to the client and to the server, effectively managing and analyzing the data being communicated.

By terminating these connections, a proxy can inspect the content of the messages being sent and received, apply security measures such as filtering and caching, and enforce policies related to data access. This allows administrators to monitor traffic, enhance security, and improve performance, especially in environments where sensitive data is handled or where resources need management.

For the other choices, while routers and switches deal with traffic, they do not terminate connections in the same way proxies do. Routers operate at the network layer and primarily direct traffic between networks but do not monitor the contents of the data. Switches operate at the data link layer and manage data flow within a network but do not have the capability to interact with the applications or content. Firewalls, on the other hand, monitor and filter traffic but may not explicitly terminate connections for both sides as a proxy server does.