When I place a clip in the timeline and try to watch it, the viewer says "Unrendered" and it will not show the clip

When I place a clip in the timeline and try to watch it, the viewer says "Unrendered" and it will not show the clip. What do I need to do to fix this?

Option 1: Render the clip in FCE then watch it.
Option 2 (preferred): Convert the clip so it will match your Sequence settings in FCE prior to importing the clip into your project.  It will not need rendering if converted properly.
-DH

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