CAC 40Financial Dictionary -> investing -> CAC 40
The stock exchange that it tracks was previously called the Paris Bourse, before it fell under the Euronext Umbrella in the year 2000, along with a merger with the Amsterdam Stock Exchange and Brussels Stock Exchange.
Changes to the CAC 40 are instigated by an independent committee known as the Conseil Scientifique, wich meet quarterly to update the index. It takes two weeks for changes to come in to affect. The selection process is a ranking of the market capitalization of freely and publicly traded stock and turnover, based on an annual basis. The top 100 companies are listed and then 40 are picked based on various economic factors, such as liquidity and the industry of the company, so that there is a wide enough selection to represent the whole of the stock exchange.
Like a lot of important indexes, the CAC 40 is used as a benchmark for other financial products and funds, to monitor performance and hopefully replicate. A lot of funds are displayed graphically, in relation to the CAC 40.
Large companies such as beauty product company L'Oreal, car manufacturer Renault and Michelin tires are commonly listed on the CAC 40 index.
The United States equivalent of the CAC 40 would be either the Dow Jones Industrial or the S&P 500 indexes.