The CAC 40 Index
What is the CAC 40?
The CAC 40 (Cotation Assistée en Continu 40) is a benchmark French stock market index. It represents a capitalization-weighted measure of the 40 most significant stocks among the 100 largest listed on the Euronext Paris exchange.
The index was created in 1988 and is calculated in real-time throughout the trading day. It is widely used as a barometer of the overall performance of the French stock market.
How is the CAC 40 Calculated?
The CAC 40 is calculated using a free float market capitalization-weighted methodology. This means that the market capitalization of each company in the index is multiplied by its free float, which is the number of shares that are freely available for trading.
The resulting values are then summed to arrive at the total market capitalization of the index. The index is then divided by a divisor that is calculated to ensure that the index remains constant over time.
What are the Components of the CAC 40?
The CAC 40 is composed of 40 of the largest and most actively traded stocks listed on the Euronext Paris exchange. The companies that make up the index are selected based on their market capitalization and liquidity.
The index is reviewed twice a year, in March and September. Companies that no longer meet the eligibility criteria are removed from the index, and new companies are added to replace them.
How is the CAC 40 Used?
The CAC 40 is used by investors and traders as a benchmark for the performance of the French stock market. It is also used as a basis for a variety of financial products, such as index funds and futures contracts.
The index is also widely followed by the media and the general public as an indicator of the overall health of the French economy.
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