R ISKY BUSINESS ? Is forex as risky as everyone thinks? One way tomeasure risk is to compare a financial product’s riskrelative to its return. If you take the time to comparean investment in forex to common investments suchas equities and fixed income, you will find that froma risk/reward standpoint, forex investments providerespectable returns and should be considered viableportfolio diversification tools. For example, 2001 annual volatilities for the Dow Jones Industrial Average (D JIA ), 30-year bond futures, and US dollar/yen (U SD /J PY ) were roughly 21.5%, 10%, and 10.5%, respectively. An investment in abasket of major currencies (or U SD /J PY ) last year was comparable to 30-year bond futures (which was oneof the best returns for the fixed income markets inyears), and clearly outpaced the negative returnsgenerated by the D JIA .