You get a document asking some of the questions that are at the back of the chapters in the ARM (pre course reading). At the minimum you should go through that, it will make things a little easier.
Some people in our course did nothing, some did more than was required.
The exam in the first week is just as an indication to the trainers what your level of knowledge is... you aren't going to be judged on it. That being said... the more you know, the easier the first few weeks will be, and they are pretty intense. I wish I had done a little more in hindsight, but no-one has had any issues with the theory side of things yet.
You'll probably thank yourself for any extra effort you put in beforehand.
Time wise, you get the material about a month before you start which is more than enough time to do what you need to do.