By Daniel Rediger, CTP
In my life, I’m often searching for the minimum effective dose—the most efficient way to approach a challenge or problem and get the most return for the time and energy invested. I want to get the most bang for the buck, you could say. When it came to becoming a Certified Treasury Professional (CTP), things weren’t any different. I wanted to find the cheapest, fastest, and most effective way to study for and pass the CTP exam on the first attempt. While I wouldn’t claim this as the best or only way, it certainly worked for me, and I’m happy to share the love!
To start, you want to gauge your current knowledge, allowing you to study smarter and target areas of weakness, gaining the highest return on study time invested. Considering the two years of related experience required prior to taking the exam, you likely have a substantial amount of knowledge in at least one of the domains that the test is broken into. You don’t want to spend too much time studying in domains where you’re already proficient—here are some ways to prevent that.
1. Take the 170-question practice CTP exam. The exam is available for free on the AFP website. Take it before you even begin studying.
2. Upon completion, grade yourself and determine what your percentage of incorrect answers is for each domain. For example, in a 40 question section, 10 wrong answers equals a 25 percent incorrect rate.
3. Next, referencing the Certification Candidate Guide, you can find the potential number of each questions you’ll see on the exam. I used the median of the range provided for each domain to calculate the approximate percentage of each type of domain question (Q) to expect on the exam—as of 2015 this would be:
• Domain 1: The corporate treasury function (30 Q | 17.6%)
• Domain 2: Cash and liquidity management (38 Q | 22.4%)
• Domain 3: Working capital management (35 Q | 20.6%)
• Domain 4: Capital markets and funding (23 Q | 13.5%)
• Domain 5: Treasury operations and controls (24 Q | 14.1%)
• Unscored questions (20 Q | 11.8%)
4. Finally, now that you have your percentage of incorrect answers for each domain and the approximate weight of domains on the exam, you can multiply these values together to know exactly where to start studying. For example, 25 percent incorrect in Domain 2 [25 x 22.4 = 560] and 37 percent incorrect in Domain 4 [37 x 13.5 = 499.5])* Even though you missed a higher percentage of questions in Domain 4, there’s more value in studying Domain 2 first, because it has a higher weight (more questions) in the exam.
* For ease of use the actual numeric value of the percentages was not used—regardless, the comparative result is the same.
How to study
Now that you know what to study, it’s time to understand how to study. Of course, everyone studies differently, and you’re welcome to go about it using your preferred method, especially now that you know what domains to target. Nevertheless, considering my goals of cheap, fast, and effective, here is the route I took.
My “cheap” objective in mind, I used only the “Essentials of Treasury Management, Fourth Edition”, because it seemed essential—no pun intended. After combing through just one chapter in my highest target domain for what felt like an eternity, it became glaringly apparent that reading page by page would take far too long, and likely exhaust my brain rather than prime it for learning. That’s when I stumbled upon the “Test Your Understanding” (TYU) section at the end of the chapter. A generous list of questions reviewing nearly every highlight and important topic, term and equation of the previous chapter—if only there was an answer key… but wait, there is!
The answers listed for each TYU section, found towards the end of the book, were a lifesaver. Not unlike a school exam where the professor gives you the questions in advance, or reading the CliffsNotes of a book. Here’s how you can use these provided questions and answers to your advantage:
1. Considering your target domains, read through a chapter’s TYU questions and answers thoroughly.
2. Skim through the actual chapter, specifically looking for concepts, terms or equations that weren’t referenced or sufficiently expounded upon in the TYU answers.
3. Write down notes on any new material found in the chapter directly into the TYU section in your book—this consolidates all of your thoughts and notes for each chapter onto a few designated pages.
4. After you’ve reviewed each chapter’s TYU questions and answers, and skimmed through the chapters for extra information, review all of these pages, studying the questions, answers and notes now taken.
5. Finally, review your original sample test, specifically focusing on the questions you missed—if you don’t now know the answer, use your book to search them out and study the corresponding material.
That’s it! This method of preparing for the CTP exam worked great for me, and I hope my journey and process can be of some value to even just a few readers and fellow finance champions! Remember, this is a tough exam and passing requires a lot of knowledge, especially on the first attempt. While I certainly recommend “hacks” to make your studying as effective as possible, it’s still going to take grit, determination, and discipline to get it done.
Good luck my friends.
Daniel Rediger is assistant cash manager for HCA Healthcare.