2. An insurance firm in Chile sells long-term (25 year) annuity policies in Germany and invests the Euro proceeds long-term (25 years) in U.S. stock and bond markets. Discuss the following regarding this business activity. a. Describe the foreign exchange exposure faced by the Chilean firm, and how the swap market can be used to hedge this exposure. b. Give one major worldwide economic implication associated with the swap market's ability to hedge long-term exchange rate exposure? 2. An insurance firm in Chile sells long-term (25 year) annuity policies in Germany and invests the Euro proceeds long-term (25 years) in U.S. stock and bond markets. Discuss the following regarding this business activity. a. Describe the foreign exchange exposure faced by the Chilean firm, and how the swap market can be used to hedge this exposure. b. Give one major worldwide economic implication associated with the swap market's ability to hedge long-term exchange rate exposure