Wall Street or Bust

New York - "GREED STREET or Wall Street...U decide?" Colorful tags below


MBA Program Spotlight: Investment Banking


While bankers may not have the best reputation at the moment, they are still in high demand and still an important part of what makes the economy work. All institutions – business, government, and non-profits – need investment bankers to manage capital formation, provide financial advisory services, and manage assets. If you can handle the work schedule – long hours spent behind a computer analyzing data, researching industries and world economies, churning out spreadsheets – and if you have the right temperament for the stress that accompanies the risking millions of dollars for your clients, the rewards in this career are great. There is a lot of prestige, of course, but primarily the reward is the paycheck. The money that can be made in banking is astronomical. The salaries and the bonuses can afford extravagant lifestyles that may be hard to come by in other business fields. And the long hours won’t last forever. Paying your dues on Wall Street when you are young, can open up many other opportunities to work in private equity or be the boss of your own firm where you can set the hours and have the opportunities to enjoy all that cash! Here are some great schools that will steer your career in the right direction.


New York University – Stern

What’s so great about this school? Where better to study investment banking than in the heart of it all – the Big Apple? Students at Stern are well-positioned for internships and networking with the world’s most well-known banks including Barclays Capital, Credit Suisse, Deutsche Bank, JP Morgan, Goldman Sachs, and Morgan Stanley, just to name a few. The mean base salary for graduates is $102,000 with signing bonuses of almost half that amount. After graduating from Stern, it’s a safe bet that you will always be in demand, but just in case you should find yourself in need of help, career services offers professional development and career counseling for life.

School Type: Private

Median GMAT Score: 720        

Average Incoming GPA: 3.51

Percent of Applicants Accepted: 32%

Student to Faculty Ratio: 2 to 1

Average Student Age: 27


Tulane – Freeman School of Business

What’s so great about this school? While you may not think of New Orleans as a hotbed of investment activity, the real-world experiences available to MBA students ensure that they receive an education that will prepare them to compete with the best bankers around. Students can work in the on-campus trading center – an interactive classroom that mirrors every detail of the trading floors of the world’s major brokerage houses. The Burkenroad Reports credit class gives students extensive training in equity analysis, and sends them to Wall Street for workshops and access to top managers from major investment banks. Finally, top students will be invited to help manage the school’s Fenner Fund, which has 2 million dollars in stock portfolios.

School Type: Private

Median GMAT Score: 664

Average Incoming GPA: 3.33

Percent of Applicants Accepted: 25%

Student to Faculty Ratio: 4 to 1

Average Student Age: 26


DePaul – Kellstadt Graduate School of Business

What’s so great about this school?  In the competitive business environment of Chicago, DePaul is viewed as one of the top three business schools and its part-time MBA program in particular has received numerous top 10 rankings in nationwide publications. The finance concentration at DePaul offers two distinct tracks for bankers. The Banking track focuses on capital markets and interest rates and the Investment Management track focuses on valuation of investment instruments, portfolio management, and financial analysis. The number of electives offered lets students have a concentration in both, if they wish.

School Type: Private

Median GMAT Score: 560

Average Incoming GPA: 3.55

Percent of Applicants Accepted: 64%

Student to Faculty Ratio: 18 to 1

Average Age: 28


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Working with Factors and Divisibility

factor game

One of the many GMAT math concepts that we learn in grammar school but probably don’t use very often in real life is how to work with factors. Factors are numbers that go into other numbers evenly. For example, 3 and 4 are factors of 12. Prime factors (numbers divisible only by one and themselves) help us realize whether one very large number is divisible by another.

For example, the prime factors of 108 are 2, 2, 3, 3, and 3 and the prime factors of 36 are 2, 2, 3 and 3. If we write those out as a fraction, we get:

2 × 2 × 3 × 3 × 3
    2 × 2 × 3 × 3

Every prime number in the denominator can be cancelled out by a prime number in the numerator, so 36 is a factor of 108. The numerator can have a lot of different prime factors left over. All that matters is that the prime factors in the denominator are cancelled out. Here’s another example with  18036:

2 × 2 × 3 × 3 × 5
    2 × 2 × 3 × 3

The 5 in the numerator doesn’t correspond to any numbers in the denominator, but that doesn’t matter. Every prime factor in the denominator can be cancelled out. For a counter example, let’s try 27036:

2 × 3 × 3 × 3 × 5
    2 × 2 × 3 × 3

There are two 2s in the denominator, but only one 2 in the numerator, so we are unable to cancel out all prime factors in the denominator, and we then know that 270 is not evenly divisible by 36.

So how can we use this concept on the GMAT? Let’s look at question 116 on page 168 in the GMAT Official Guide, 13th Edition. P, the numerator, will include every prime factor for every number 1 through 30 inclusive. However, the only prime number in the denominator is 3. So the question is really asking how many 3s there are in the numerator. However many 3s are in the numerator will be the same amount that can be in the denominator and be cancelled out to make 3k a factor of P. Take every number in the range that is a multiple of 3 (3, 6, 8, 12, 15, 18, 21, 24, 27, and 30) and count up the 3s. Remember that some may have more than 1 (for example, 27 = 3 × 3 × 3). The total is 14, answer C.

Let’s also have a look at question 77 on page 163. When we work with factors and multiplication, the prime factors in the denominator only have to be cancelled out by one prime factor in the numerator. But addition and subtraction are a bit more complicated in that every number in the numerator needs to have the same prime factors as the ones you want to cancel out in the denominator. Here is an example with (72 + 24)12:

(2 × 2 × 2 × 3 × 3) + (2 × 2 × 2 × 3)
                      2 × 2 × 3

The 2, 2, and 3 in the denominator exist in both the prime factors of 72 and 24.

(2 × 2 × 2 × 3 × 3) + (2 × 2 × 2 × 3)
                     2 × 2 × 3

So 12 is a factor of 72 + 24. However, if we try (46 + 24)12 we get

(2 × 23) + (2 × 2 × 3 × 3)
                2 × 3 × 3

We don’t have the right prime factors in 46 to be able to cancel out those in the denominator, so 12 is not a factor of 46 + 24. Since question 77 has addition, we know that the correct answer must have the same prime factors as both 20! and 17. Since 17 is a prime number, it is only divisible by 1 and 17, so 15 and 19 cannot be factors of the expression.

Factors can be more complicated than just a single number. So stay tuned and in a few weeks we’ll discuss a few more problem solving questions that use factors.


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You Bought the Books, Now What?

Calendar Card

A few weeks ago I wrote about how to find motivation to study for the GMAT and how to approach studying with a positive attitude. I’m sure that you took my advice to heart and have decided to buckle down and get to work so that you can have your GMAT experience behind you by the time the summer arrives. So today I’d like to offer you some tips about creating your study schedule. If you’ve read my book, you know that creating (and sticking to!) a study schedule is an important component of studying for the GMAT. My book has 35 pages devoted to helping you do just that, including a lot of great advice about how long you should study each day and what to study each day. This post will serve as a bit of a reminder about some of those tips, as well as offer you additional guidance, by talking about some of the most common mistakes GMAT test-takers make when studying.

1)      Skipping over the basics. Some people want to dive right into realistic GMAT questions, and for some people, that’s fine. Others, however, can’t remember how to add fractions or what the formula is for the area of a triangle. If you are struggling with the basic concepts – brush up on them first. The GMAT Official Guide has lots of basic math information before the problem solving section. Make flashcards for formulas and properties of numbers that you don’t remember. You can’t expect to solve the 37 quantitative questions in the time allotted if you are struggling with the concepts. You also can’t focus on good test taking strategies, like backsolving and estimation, if you can’t grasp what the question is asking.

2)      Avoiding topics they think they know well. If you think back to middle school and remember that you were an algebra-whiz kid, you might think you should focus on statistics and sentence correction. However, middle school was a long time ago and solving algebra questions on the GMAT is a whole different experience. It’s just as important that you practice the topics you think you are good at as those you have a hard time with. Keep in mind that the test is computer adaptive. If you get the easy and medium algebra questions correct right away, the test is going to give you some real whoppers.

3)      Avoiding topics they don’t like. On the flip side, don’t avoid the topics you know you have a hard time with (ahem…reading comprehension!). Don’t make the mistake of thinking that reading comprehension is only about a third of the verbal, and that if you ace sentence correction and critical reasoning, you’ll get a great score. Chances are that you will make at least a few mistakes in sentence correction and critical reasoning, so you can’t rely on those topics only for a high verbal score. If you spend a bit of time with those boring reading comprehension passages (or whatever your nemesis is), you might find that you can get a few extra points more easily than you think.

4)      Thinking more and more and more practice is the best approach. The study schedule that my book lays out includes a lot of time spent reviewing questions that you miss in your practice. Looking at the right answer and moving on immediately doesn’t help. Reviewing questions you missed means checking to see whether you made simple calculation errors, checking to see whether you missed an opportunity to use a strategy, and noting patterns in the types of questions you miss so you know what to focus your study efforts on. Use the “standardized” part of this standardized test to your advantage. Questions are about concepts and patterns, not individual questions. If you take the GMAT 20 times, you will see roughly the same 37 quantitative questions each time, just with different words and numbers. You don’t need to see an example of every type of question that has ever been on the GMAT. You just need to recognize the concept that is tested in each question and have an approach for that concept. Reviewing missed questions helps you figure those concepts out.

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How to Match the Answers to the Text in Reading Comp

Two parallel stacks of books on blue background

As you are probably used to hearing me say by now, every reading comprehension answer has to be clearly supported by information in the text. Even when a question is written as a hypothetical scenario, there will be evidence in the passage that supports the correct answer. However, it can be easy to let your mind wander outside of the information in the passage when a question is hypothetical. In today’s post, we’ll practice with two such questions so that we can master good techniques.

The first is question 112 on page 408 of the GMAT Official Guide, 13th Edition. The first step to answering this question correctly is taking the time to articulate the method that the author finds problematic. This is found in lines 7 – 9, which say that we shouldn’t remove a species that might be the keystone species then observe changes in the ecosystem. Now that we have identified the problem, we just have to look through the answers to find an experiment that does just that. Answer C explicitly mentions removing a species and then observing the ecosystem after that species is gone. This is correct.

While the answer to this question may have been relatively easy to identify, you can still look at the other answers to understand the ways in which the GMAT test writers attempt to trap you. Most of the wrong answers discuss topics related to keystone species that are discussed in the passage as well. Answers D and E discuss the influence of different environments on the keystone species, as is discussed in lines 118 – 122. Answer B discusses the possibility of another species occupying the keystone role, as is discussed in lines 27 – 29. On more difficult questions, if you don’t take the time to articulate the author’s position first, you could easily be attracted to one of these distractor answers.

Let’s try one that is more difficult – number 123 on page 413. Here, we need to first articulate the social constructivists’ version of technological determinism. The evidence is tricky to find because of the wording of the paragraph in which we find the answer (lines 25 – 32). You may need to read this paragraph carefully to understand that it does actually give the social constructivists’ version, not the true beliefs of the technological determinists. The constructivists’ version is that machinery imposes forms, and technology directly influences skills and work organization. Answer A is a direct match for that idea. Other answers, like B and C, support Clark, who refutes this version of technological determinism.

If you struggle with this question, remember to wary of answers that are extreme. Answer B uses the word all and answer D uses the word most. Such words are rarely supported by the passage. If you don’t see those extreme ideas expressed in the passage, they aren’t correct.

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Mixing Math and an MBA

Focusrite Saffire Pro 40 motherboard

MBA Program Spotlight: Business Analytics

 Are you really into math and statistics but can’t envision yourself as a nutty professor? Maybe you are afraid of becoming the next John Forbes Nash, Jr. if you hide away completely into the world of numbers, but you still know that quantitative analysis is the skill that will propel your career. Well, you might want to consider a career in business analytics. Business analytics uses quantitative and statistical methodologies to analyze, explain, and predict business performance. The fields that you could enter with a concentration in business analytics are endless: retail sales and pricing, financial services, risk analysis, telecommunication, fraud analysis, and much more. In addition, a concentration in business analytics will teach you advanced software skills (such as Excel and SAS) that will be invaluable to you as you look for a job. Here are a couple of great programs to get you on your way. 


University of Texas at Austin – McCombs School of Business

 What’s so great about this school?  UT Austin offers a very robust business analytics concentration with 2 core courses and 4 electives. Many of the courses focus on marketing analytics, but there are also courses on supply chain management, pricing, and social media. These courses are taken throughout the two years of the full time MBA program, rather than after completion of the core curriculum, so that you can apply the principles of data analysis through all of your relevant coursework and really have a firm grasp of the content when you graduate. There are also experiential and international learning opportunities, and an active Sigma Fellows student organization.

School Type: Public

Median GMAT Score: 693

Average Incoming GPA: 3.43

Percent of Applicants Accepted: 34%

Student to Faculty Ratio: 2:1

Average Student Age: 28



University of Louisiana, Baton Rouge – E.J. Ourso College of Business

 What’s so great about this school? This program allows you to narrow the focus of your business analytics concentration down even further into business intelligence, data mining, or web analytics. You can take just 3 courses in your specialization, or as many as 5 to maximize your knowledge during your time in the MBA program. The data mining courses help prepare you for the SAS Predictive Modeler Certification exam, which saves you the time and money of prepping for this valuable certification later on.

School Type: Public

Median GMAT Score: 615

Average Incoming GPA: 3.42

Percent of Applicants Accepted: 76.7%

Student to Faculty Ratio: 1:1

Average Student Age: 24



University of North Carolina, Charlotte – Belk College of Business                                                        

What’s so great about this school? The UNC Charlotte program consists of 22 hours of core courses, and then students complete the remaining 15 hours by taking courses in the specialization of their choice. The Business Analytics specialization includes 3 core courses about modeling, data management, and project management, and then students can select their final course for the specialization from their individual area of interest. They offer some unique and interesting courses, such as Econometrics, Business Data Communications, and Pricing and Position Strategy. UNC Charlotte is also one of the best value MBA programs, even for out-of-state students.

School Type: Public

Median GMAT Score: 600

Average Incoming GPA: 3.0

Percent of Applicants Accepted: 49.1%

Student to Faculty Ratio: 21:1

Average Student Age: 29


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How to Avoid More Data Sufficiency Traps

All About Math

Several months ago I wrote a post about not jumping to conclusions on data sufficiency questions. Sometimes, you will need to do more math on these questions than you think is necessary in order to avoid selecting a trap answer. Today’s post will be a continuation of the same idea, but we are going to focus on one particular trap – the too obvious answer.

Let’s start with question 163 on page 290 of the Official Guide, 13th Edition. Here, you might be tempted to select answer A and move on, since all A requires is that you divide 60 by 4. But when one statement is so obvious, you should take a long, hard look at the other statement. Since the first statement has tricked your mind into thinking this is a very easy question, your instinct will most likely be to gloss over the second statement because you already think you have the answer. However, if we look carefully at statement 2, we realize that we can create an equation with one variable, which means the statement is sufficient. If x is the original number of members, we divide 60 by x to get the value of the contribution of each member and then add $2 for the increase when (equals sign goes here) we take away 5 from the original number members, x. So, the equation is 60x + 2 = 60(x – 5).

Do you want to see a few more questions that try to trap you this way? Flip to page 288 and look at number 142. Statement 1 is obviously sufficient because it gives the total number of tosses, but statement two seems to be irrelevant because it discusses points earned based on results of the tosses. But here again we can create an equation with one variable. Heads, represented by x + 4 (according to the question stem) will be multiplied by 3 and tails, represented by x, will be multiplied by 1. So, the question is 3(x + 4) + 1(x) = 52. We then discover that x = 10, so there were 10 tails and 14 heads, for a total of 52 tosses.

One more? OK, let’s turn to page 284 and look at number 107. Statement 1 is sufficient because you would only need to divide the total number of frames by the seconds and then multiply by 60 to convert to minutes. But what about statement 2? Again, we can write a single variable equation: 6x + x = 14. This gives a value of 2 for x and a total of 12 minutes to run the cartoon. Although the information provided in statement two was entirely different from that in statement one, it was still sufficient to answer the question. Also, notice that 12 minutes is 720 seconds, which means that there are 24 frames per second. This is consistent with the information in statement 2. If the correct answer is D, the information in the two statements cannot contradict each other.

I’m not saying that every time one statement is too obvious, the other statement will always be sufficient and the correct answer will be D, but I am saying, once again, that you shouldn’t jump to conclusion. Be sure to give each statement its fair amount of attention so that you don’t miss an easy point.


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How To Reduce Stress on Test Day

STICC Lab Instruction Room

Of all the stresses that are involved in taking the GMAT, worrying about conditions at the test center should not be one of them. There are many potential issues that you can overcome or prepare for long before big day comes. Here are a few of them.

                       Noise: The test center is not a completely quiet environment. People in your center will be taking a variety of tests that start and end at different times, and have breaks at different times. You can expect people to be walking back and forth behind you, and you can expect a little chatter from outside as people enter and leave the room. Keep this in mind as you practice; don’t practice in a completely isolated and quiet place. You will be given headphones to help block the noise, but some people don’t find them very comfortable.

                       White Boards: You will be given white boards and a marker for your scratch work. Most people don’t find this problematic, but some test takers really have an affinity for the old number two pencil. If that sounds like you, pick up a felt tip pen and some white boards to practice on.

                       Missing Time During Breaks: You have two, optional breaks during the course of the test. However, when you enter and leave the test room, you need to check in and check out with the staff. If your test center is large or extremely busy, you may end up having to wait a few minutes until you can check back in. But if your break time is finished, your test will resume regardless of whether you are sitting in front of your computer. Be aware of the procedures and the volume of people in your test center and don’t plan on checking back in from break when there are just five seconds remaining.

                       Hunger and Cold: Dress in layers and bring a snack to eat during your break. There are lockers for your personal items just outside the test room. However, you should know that you aren’t allowed to use a cell phone during your break, so you should just leave it in your car to avoid the temptation and possibly have your score invalidated.  

                       Getting Lost: Know where your test center is beforehand and plan to arrive 30 minutes early. You will forfeit your appointment and test fee if you are 15 minutes late. Every location is different, so visiting the center before test day can do a lot to help calm your nerves. You can also check out the forums to find out about other people’s experiences at your center so that you won’t be surprised by the conditions. You can even sign up to take a practice test in your test center if your nerves just seem to be unshakeable.

 But even the most prepared test takers run into unexpected circumstances. Some people have reported computer glitches that erased their scores part way through the test, cleaning crews entering during test times, power outages (although all test centers should have generators for backup), or inclement weather that prevented them from getting to the test center. In the case of extreme weather (hurricanes, for example) the test center will be shut down and all test takers scheduled that day will be able to reschedule free of charge (this possibility should be good motivation not to wait to the the GMAT until the day before your B-school application is due!). However, be aware that if something happens in the center in the middle of your test, you will have to take the GMAT over from the beginning; it isn’t possible to resume an interrupted test. In the event that something horrible, such as a computer glitch, should happen during your testing experience, your options for recourse are limited, but it never hurts to try. You can, and should, file a complaint. GMAC will investigate and in the case that your complaint is found valid, you will be able to retest at no fee.

Knowing what to expect can go a long way toward calming your nerves. GMAT preparation is not just about knowing the content; it’s about being familiar with the entire process.

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Fill in the Gap

Assumption, Minnesota

Assumption questions can be quite tricky on the GMAT because the answer choices are often answers to other critical reasoning question types, such as inference questions and weaken questions. The arguments that are given for assumption questions include the premises (the facts) and the conclusion (what the author wants you to believe). The assumption is a statement that must also be true in order for the stated premises to lead to the conclusion. It is missing information, the link between the premise(s) and conclusion. So to find the assumption, you have to think about what the written argument is lacking. Generally, you can do this just by focusing on the key words in the premises and conclusions. The correct answers to assumption questions never contain unrelated information.

Let’s try question number 75 on page 522 of the GMAT Official Guide, 13th Edition. The first sentence is the premise and the second is the conclusion, which is indicated by the word therefore. The premise focuses on the transfer of information from lower levels to the superior. The conclusion focuses on the same. Since the assumption needs to link those two sentences, the answer should be limited to that concept as well.  Here are the options:

                (A) The word should indicates another conclusion, not an assumption.

                (B) The word should indicates another conclusion, not an assumption.

                (C) Problem-solving ability is off-topic.

                (D) Yes – this answer has the same focus as the premise and conclusion. We cannot conclude that the chief executive is less well informed unless we know that the subordinates who have the problem are the only ones who initiate the flow of information. If employees at higher levels have direct access to the information, it will not be as distorted when it reaches the top.

                (E) This answer weakens the argument because it says that some employees won’t distort the information.


Number 83 on page 525 is another, slightly harder, example of an assumption question. Here we have two premises: (1) some people are allergic to sulfites in wine and (2) some winemakers don’t add sulfites to their wine. The conclusion is that the people who are allergic can drink the wines that don’t have the added sulfites. Again, remember that the assumption is a link from premises to conclusion, so you need to find an answer that mentions only sulfites, wine, and allergies.

                (A) Preservative effect is off-topic.

                (B) The form of the sulfite doesn’t matter because the argument specifies that none is added at all.

                (C) Other beverages are irrelevant.

                (D) Other substances are irrelevant.

                (E) Yes – this answer includes all of the key subjects from the premises and conclusion and indicates another way that people might have an allergic reaction from sulfites in wine. The possibility of the sulfites occurring naturally, since the argument only mentions added sulfites, must be addressed for the conclusion to be valid.


 Let’s try one more – a really tricky one this time: question 93 on page 529. The first sentence is the premise and the concept discussed is the retaliatory closing of trade markets. The conclusion, phrased as a hypothetical statement in this case, is that retaliation would lead to the end of trade. So, the correct assumption obviously needs to discuss closed markets and the impact on trade.

                (A) This answer somewhat weakens the argument, or at least implies that we need not worry about the commentator’s hypothetical scenario.

                (B) The word should indicates another conclusion, not an assumption.

                (C) The word should indicates another conclusion, not an assumption.

                (D) Yes – this answer discusses closed markets and explains that a country can follow the theory of trade retaliation but will still continue to trade because its trade partners have not closed any of their markets. Because the commentator’s conclusion is so extreme—no country would trade with anotherhe is assuming that there is always some market that is closed between any two countries.

                (E) Foreigners and domestic products are off-topic.

So remember, for assumption questions, focus on the key words or concepts in the premises and conclusion, and look for an answer that specifically address those, without bringing in any new information.


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Non-Separation of Church and Academics

All Souls Unitarian Church

MBA Program Spotlight: Faith Based Schools


If we think back to Enron, Bernie Madoff, subprime mortgages, and even all the way back to robber barons and war time profiteering, it is clear there is a need for ethics classes in business school. But religion? Unlike some countries that have official state religions or operate under religious law, the United States is legally a secular society. Regardless, as a savvy business person, you are aware that you will be dealing with people from a variety of backgrounds who may have religious guidelines that influence their business decisions. And you don’t have to travel out of the United States to find yourself in that situation. In fact, that person may be you. If religion plays a strong role in your life, you may wish to attend a business school that is guided by religious principles. Here are a few great options.


University of Notre Dame – Mendoza

What’s so great about this school?  Despite certain well-publicized scandals perpetuated by the undergraduate population of this university, the business school students live by high moral codes. The Financial Times gave the MBA program a #1 ranking for Corporate Social Responsibility and Businessweek gave it a #1 ranking for Ethics. The ethics department offers courses in Spirituality and Religion in the Workplace and Values-Based Multinational Management, as well as instruction in working with people from different religious backgrounds in many other ethics courses. Two year MBA students can select from a wide variety of concentrations and a one year accelerated program is also available for qualified students.

School Type: Private

Median GMAT Score: 710

Average Incoming GPA: 3.31

Percent of Applicants Accepted: 24%

Student to Faculty Ratio: 1:1

Average Student Age: 27


Baylor University – Hankamer School of Business

What’s so great about this school? Students at Baylor have a strong commitment to community. They participate in prison outreach programs and sustainability initiatives in the Waco area, and the program has been recognized by the Aspen Institute for its focus on environmental stewardship. The full-time MBA program specializes in health care and entrepreneurship, and is specifically designed for younger students, typically with about 2 years of work experience. All classes place a Christian perspective on business leadership and potential students who can demonstrate exemplary Christian character, conduct, and commitment are eligible for scholarships.

School Type: Private

Median GMAT Score: 628

Average Incoming GPA: 3.31

Percent of Applicants Accepted: 39%

Student to Faculty Ratio: 2:1

Average Student Age: 26


Seton Hall – Stillman School of Business


What’s so great about this school? Seton Hall is a Catholic university that prides itself on fostering sound judgment, personal decency, and intellectual integrity in all students. Most Seton Hall MBA students are pursuing their degrees while working full time and those with a lot of managerial experience can even apply for a GMAT waiver. The program is only 18 months long but is still fully AACSB accredited, and it offers specialties such as Information Technology Management, International Business, and Sport Management.

School Type: Private

Median GMAT Score: 500

Average Incoming GPA: 3.0

Percent of Applicants Accepted: 85%

Student to Faculty Ratio: 21:1

Average Student Age: 29



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Percents: More than Calculating Tips

20% sign

Even if you have already learned how to accurately and quickly calculate a tip using mental math, you may still be struggling with percentage questions on the GMAT. Today we will look at three questions that test percents in different ways.


Let’s start with problem 71 on page 162 of the Official Guide, 13th Edition. This question is a very straightforward percent question as far as setting up the equation. The total is 2,420 stocks which has to be broken down into two categories, one of which is 20 percent greater than the other. Therefore, the equation is: 2,420 = x + 1.2x

Solving for x results in 1,100, which, not coincidentally, is answer choice C. But C is NOT correct! The trick in a question such as this which seems to be testing reallybasic concepts about percents is in the wording.  With all the language changes from different, higher, lower, percent greater you can quite easily become confused and answer the question incorrectly, not because you made a math mistake but simply because you misread it. Always double check the question. In this case, because the question is looking for the number of stocks that closed higher (represented in our original equation as 1.2x) , we should multiply 1,100 by 1.2 to find answer D, 1,320.


Now let’s move on and look at a different type of percent problem. Flip to page 164 and look at question 84. The Official Guide gives a very official explanation for this question with yet another formula you might think you have to master to do well on the GMAT. Instead, let’s think about what compounding does. Compounding means that at some point during the year (every three months if compounded quarterly, for example) the interest already earned is added to the principal and you start earning interest on that interest as well. Since the balance has been increased, by the end of the year, you will earn a little bit more than if you just had simple annual interest.  

Therefore, even if you don’t know the formula, you can use process of elimination. The simple interest on $10,000 at a rate of 8 percent would be $800. Knowing that compounded interest results in a higher amount, you can eliminate answers D and E. You should also be able to tell that answer A is too large. Answer C ($816) is correct. Half the interest ($400) is earned by the 6 month, which is also the compounding point in this question, so you will also earn the remaining 4 percent not only on the original $10,000 but also on that $400. That comes out to $16 more than the simple $800 earned for the year.


A third way that percents are tested is with percent change. Percent change has a simple formula, way simpler than the Official Guide would like you to believe. That formula is: differenceoriginal

The explanation for question 114 on page 168 uses way more variables than are necessary. All you need to use is a single x. If x represents the original number of workers, then your formula becomes (.16)x – (.09)(1.2x)(.16)x. The numerator is the difference (16 percent originally minus the 9 percent new value in an overall larger population that is 20 percent greater), and the denominator is the original 16 percent. The result is .325, which is the same as 32.5 percent. Since the question specifies that you are looking for an approximate percent change, you should feel confident selecting answer B, 30 percent.


Image courtesy of HowardLake with Creative Commons License

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