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Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

CAC 40 Index

What it is:

The CAC 40 Index is the benchmark tracking index for the Paris Bourse.

How it works (Example):

Started in December of 1987 with a value of 1000, the CAC 40 is comprised of the 40 largest and most liquid stocks trading on the exchange. The CAC 40 is a float-weighted index, meaning that the weightings of each of the index's components are determined by the value of shares outstanding to the public. This prevents a large company that only issues a small amount of its shares from having a disproportionate amount of influence on the index's value. Similar to how the S&P 500 is a subset of the S&P 3000, the CAC 40 is a subset of the larger SBF (Societe des Bourse Francais) 250.

Why it Matters:

France has one of Europe's leading economies, so the CAC 40 is a strong indicator of economic health over all of Europe. Some companies tracked on this index that have significant operations in the United States include L'Oréal, Michelin, and PSA Peugeot Citroën.