The CAC40 is the main stock market index of the Paris Stock Exchange in France. It was created in 1987 and is composed of the 40 most significant companies and enterprises listed on the French market.

This index reflects the performance of the French market and is weighted by market capitalization, which means that companies with a higher market capitalization have a higher weight in the index.

Virtually all the companies in the CAC40 pay dividends. Some of the best known are Total, L'Oréal, Sanofi, BNP Paribas, Airbus, among others.

How is the CAC 40 value calculated?

To determine the daily value of the CAC40 stock index, the following mathematical formula is used based on the capitalization of its component companies:

CAC40(t) = CAC40(t - 1) × Σ Capi(t) / [ Σ Capi(t - 1) ± J ]

In addition, an adjustment coefficient J is used to prevent financial transactions, such as capital increases or reductions, from drastically affecting the share price.

The value of the CAC40 on day t is obtained by multiplying the value of the CAC40 on the previous day (day t-1) by a percentage calculated from the sum of the capitalizations of the 40 companies on day t, divided by the sum of the capitalizations on day t-1.

It is important to understand that the daily capitalization of a specific company is calculated by multiplying the number of shares by the listed value of that company on that day.

For example, if today the CAC40 closed at 5,000 points, the total capitalization of the 40 companies today would be approximately 1,200 billion euros. If tomorrow the capitalization, at the close, amounted to 1,212 billion euros, the final close of the CAC40, tomorrow would be:

CAC40 (specific day) = 5,000 x 1,212/1,200 = 5,050 basis points.

It is relevant to note that the CAC40 is regularly reviewed by the Euronext Paris Index Committee, which is responsible for selecting component companies based on a number of criteria including, among others, market capitalization and liquidity.