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I was busy (read bootcamp!) preparing for and writing the GMAT over the past two weeks. That’s why I haven’t written much lately, but I thought I’d share with you my fun experience with the GMAT!

First thing, this was a really quick decision. I had thought of writing this test for a while, but hadn’t really had the opportunity to do it. So, this time around, as soon as I had time to breathe, I decided to just go for it and get it over with. My strategy was simple: just pick a date 2 weeks from now (well originally I was more ambitious and wanted to do it in one week, but I had a humbling experience). Then everyday, in an all-you-can-eat-buffet-like approach fill your brain with training before it realizes what happened and gets tired!

I stuck to a strict and intensive schedule to make sure I do well on the test. I tried to do a timed test a day, but in the end I had 4 or 5 tests under my belt. I highly recommend the GMATPrep and POWERPREP tests. I also did most of the GMAT Official Review (11th ed, the orange one) and read through some parts of GMAT 800 by Kaplan.

In the final days of prep, I came across this website which I wish I’d seen much earlier: Beat The GMAT. I highly recommend having a look at this. I also took review notes while studying the books and writing tests. I’ve included a part of the document here (GMAT study notes). If you are interested in the full document, send me an email. (I’m doing this to see how many people are actually interested)

Another piece of the strategy was time management. This changes from person to person, but I came up with and used the easy-to-memorize V19-40-30-20/Q17-40-27-20 rule for myself. This cryptic rule basically means: For Verbal, be on question 19 or further when the clock shows that you have 40 minutes left, and be on question 30 or further when it hits 20 minutes. Same for the Quantitative section. I have a spreadsheet for helping with making these rules. If you are interested in seeing and using it, let me know.

Also, make sure you don’t forget preparing for the Analytical Writing Assessment part. There are good resources online (listed at the bottom) for practicing and improving time-management for these essays.

In the end, I had a blast on the test day. And the result was amazing, too. Actually, way better than expected! I had studied hard to get a score above 700. I was pleasantly shocked to see my score in the end. If I were a little better at marketing, I would change the title of this post to: “get an unbelievable GMAT score in two weeks!”

Hope this post is of use.

Last but definitely not least, I’d like to thank Kevin Au and Todd Presswood for sharing with me invaluable information regarding the test.

Additional Material

Email me for this stuff:

• The full study notes
• The Time-Management Rule Maker spreadsheet
• My actual score if you’re interested

Online Resources

Here is a list of webpages that I may have used.

• http://www.4tests.com/exams/examdetail.asp?eid=31
• http://www.crack-gmat.com/gmat-test.htm
• http://www.projectgmat.com/problems.html
• http://beatthegmat.blogspot.com/2005/08/reflecting-on-my-gmat-experience.html
• http://www.mba.com
• http://www.kaptest.com/Business/Business-School/BU_home.html

Here’s a little brainteaser to think about while commuting to work on the Greyhound bus! (that’s another story maybe for another post).

If you go to x-rates.com or Yahoo Currency Converter you can obtain a table of exchange rates for world’s major currencies. Here’s a sample:

* (USD to CAD element was changed from 0.98870 to 1.0 in the example below)

The data is essentially a matrix as follows (with a bit of rearranging and reducing the number of currencies):

C for Canadian Dollar
U for US Dollar
E for Euro
CU: price of 1 Canadian dollar in US dollars as reported in the table
UC: price of 1 US dollar in Canadian dollars as reported in the table

This matrix, in an efficient, arbitrage-free market, should simplify to:

Therefore, the test is to form the Foreign Exchange Matrix, and then calculate the following expression in Matlab, Excel, etc:

, where n is the number of rows in the FX table. (3 in the above example)

If the resulting matrix has non-zero elements, it is theoretically possible that arbitrage can happen. Note that “non-zero” is relative as it is unlikely that you get all zeros because of round off errors. But, dividing (the absolute value of) the biggest element by n gives you a good idea about the potential amount of arbitrage. For example, applying the formula to the sample data at the beginning of the text shows that the inconsistency in the table of rates is, more or less, about 0.678%. (Again, the sample table was tampered with for the sake of the example. Using the original data, the arbitrage potential was 0.00068%.)

I recommend that this formula be used for a quick test as opposed to a full diagnostic review of your FX table. There are definitely better and more elaborate ways of arbitrage detection and pinpointing what algorithm can make you the most amount of money. This post is only meant to show how a little bit of Linear Algebra can be used as a quick test of online data.

Also, the chances of making money this way is very low. That is because markets are quite efficient these days. Also, all FX trading accounts have a trading spread which is basically charging you a small premium every time you do a trade. This small amount is large enough to cover the arbitrage opportunity as detected above. If you know of a trading account that isn’t like that, I would love to know about them

Let me know what you thought of this post. Do I have what it takes to be a Quant!? If you’re interested in the spreadsheet that does the calculations, let me know.