DEFINITION of 'CAC 40'

The French stock market index that tracks the 40 largest French stocks based on market capitalization on the Paris Bourse (stock exchange).

BREAKING DOWN 'CAC 40'

The CAC 40 is used as a benchmark index for funds investing in the French stock market and also gives a general idea of the direction of the Paris Bourse. The CAC 40 is similar to the Dow Jones Industrial Average in that it is the most commonly used index that represents the overall level and direction of the market in France. At the time of writing (Aug 2005), the CAC 40 included such companies as Renault, Michelin, L'Oreal and Vivendi Universal.

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