A Modern Approach to the Efficient-Market Hypothesis
General Finance
2026-02-25 v6
Abstract
Market efficiency at least requires the absence of weak arbitrage opportunities, but this is not sufficient to establish a situation where the market is sensitive, i.e., where it "fully reflects" or "rapidly adjusts to" some information flow including the evolution of asset prices. By contrast, No Weak Arbitrage together with market sensitivity is sufficient and necessary for a market to be informationally efficient.
Keywords
Cite
@article{arxiv.1302.3001,
title = {A Modern Approach to the Efficient-Market Hypothesis},
author = {Gabriel Frahm},
journal= {arXiv preprint arXiv:1302.3001},
year = {2026}
}
Comments
The content of this paper has been published under the title "Pricing and Valuation under the Real-World Measure" [arXiv:1304.3824]