1. In a business environment in which derivative instruments have recently caused a number of macroeconomic financial problems, which of the following should an organization do if it is planning on expanding internationally into and using the currency of a country that has a non-readily tradable free-floating currency with at least partial pricing transparency and liquidity?

1. Use derivatives such as a non-deliverable forward (NDF) to hedge currency risks
2. Manage these exposures using mainstream currency futures contracts
3. Avoid using derivatives since they would likely increase risk in this situation
4. Manage these exposures using mainstream currency forward contracts