Definition
The CAC 40 (Cotation Assistée en Continu) is a prominent French stock market index. It is a capitalization-weighted index, meaning the weight of each stock is determined by its market capitalization. The index comprises the 40 largest and most actively traded stocks listed on Euronext Paris, which is the primary stock exchange in France.
The acronym “CAC” stands for “Compagnie des Agents de Change,” which was the original Paris Bourse trading system. The CAC 40 is analogous to other major indexes, such as the Dow Jones Industrial Average (DJIA) in the United States.
Examples
- L’Oréal (OR.PA): A leading global beauty company and a longstanding component of the CAC 40.
- TotalEnergies (TTE.PA): One of the world’s largest oil and gas companies, also a constituent of the CAC 40.
- LVMH (MC.PA): A major conglomerate in luxury goods, including brands like Louis Vuitton, Moët & Chandon, and Hennessy.
Frequently Asked Questions (FAQ)
What is the purpose of the CAC 40 index?
The CAC 40 is used to measure the overall performance of the French stock market. It serves as a benchmark for investors and provides a snapshot of the economic health of France.
How are companies selected for the CAC 40?
Companies are selected based on their market capitalization and trading volume on Euronext Paris. The composition of the index is reviewed quarterly to ensure it represents the most actively traded and largest companies.
How does the CAC 40 compare to other indices?
The CAC 40 is similar to other major indices like the DJIA or the FTSE 100, but it specifically tracks the top 40 stocks in the French market.
Is the CAC 40 limited to French companies?
While it predominantly features French companies, multinational companies with significant operations in France can also be included.
Where can I find the current value of the CAC 40 index?
The CAC 40 index value is regularly updated on financial news websites, the official Euronext website, and other financial data providers.
Related Terms
- Dow Jones Industrial Average (DJIA): A stock market index that measures the stock performance of 30 large companies listed on stock exchanges in the United States.
- FTSE 100 (Financial Times Stock Exchange 100 Index): A share index of the 100 companies listed on the London Stock Exchange with the highest market capitalization.
- DAX (Deutscher Aktienindex): The index of the 30 major German companies trading on the Frankfurt Stock Exchange.
- Euronext: A European stock exchange with locations in Amsterdam, Brussels, Dublin, Lisbon, Milan, Oslo, and Paris.
Online Resources
Suggested Books for Further Studies
- “The Little Book of Stock Market Cycles” by Jeffrey A. Hirsch
- “Security Analysis” by Benjamin Graham and David Dodd
- “Market Wizards” by Jack D. Schwager
- “Irrational Exuberance” by Robert J. Shiller
- “Understanding Stock Index Futures” by Robert W. Kolb
Fundamentals of CAC 40: Finance Basics Quiz
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