CTP Exam Prep Blog

I’ve talked about the formulas before and given you my thoughts on how to learn them. To be fair to all, I should tell you about a practice successfully used by others that is different from mine. That practice is called variously a formula dump, or a brain dump, or something similar.

This is the way it has been described to me: The participant writes down the formulas on a single sheet of paper, as they come across them in their studies of the BOK. Then, just before they take the test, they review all the formulas over and over. When they get to the testing facility, they go in and, using the paper and pencil provided, proceed to write down as many of the formulas as they can recall, as quickly as possible. Then they will begin the exam and, whenever a calculation is called for, they will refer to their sheet of paper. Hopefully, the formula is listed, they do the calculation, and go on to the next question.

As I’ve said before, there are as many ways to do something as there are people to get it done. If I don’t understand the logic of a formula, I can’t make it work. But that’s me. If you can cram the formulas into your mind, dump them to a piece of paper, and use them, go for it!

-          Fred Butterfield, CTP

It is a truism that every group or organization of people with a common interest will create their own verbal “shorthand” with regard to ideas, concepts, and practices considered typical in that common interest.  Here’s an example: What is the difference between a TMS and a TWS?  What is ERP (and not the famous sheriff Wyatt!) and how is it deployed?  Probably one of the most notable in recent history is the “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act.”

It is no different in Treasury than any where else.  There are many acronyms used, and in use, in all aspects of Treasury.  Many of them are in the BOK.  As you work your way through the text, make note of the acronyms you come across, and their definitions.  They are used in the exam questions and will probably cause you to answer incorrectly if you can’t recognize the acronym and what it means or what it is about.

Another stumbling point for many is about legislation.  There has been some significant legislation over the last 75 years that has direct bearing on Treasury and why things are done the way they are.  You should try to know the title, or reference name, of the legislation, the year it was enacted, and a very brief (one or two sentences at most) definition of the importance of the legislation.  As an example, Reg D defines a transaction account and Reg CC is about the availability of funds, both of which are very important in domestic Treasury.  If you write these down on a single sheet of paper, one for the acronyms, one for the legislation, they become a very useful study tool and are excellent for reviewing before you take the exam.

(By the way, the ‘notable in recent history’ mentioned above? Most just call it the USA PATRIOT ACT)

- Fred Butterfield, CTP

Let’s say you’ve been working in Treasury for a couple of years.  If you’re in a small to mid size company, chances are pretty good that you’ve had a little bit of everything land on your desk.  In a large company, you may have been more specialized in Cap Ex, or Budgeting, or any one of several other areas.  Every company is arranged differently, so it’s not really important.  What is important is that the credential is intended to give you a grounding in all the different aspects of Treasury as it is today.  This is important because, regardless of your experience, there are going to be topics and subjects that are unfamiliar, or less familiar, to you.  As you’re studying the BOK, make special note of those topics or subjects.

When you get closer to exam time, you’ll want to pull out that list of topics and subjects and re-visit them, precisely because they are unfamiliar to you.  It is entirely possible that you can use logic and reasoning to figure out the answer to a question related to a topic or subject that is familiar to you.  With a question on a topic or subject that is unfamiliar, sometimes the best you can do is go “Huh?”

My suggestion is to take time, after you’ve gone through the BOK but before the exam, and go back over the unfamiliar parts in a deeper dive to increase your understanding to the greatest degree you can.  Obviously, you won’t know it as well as a 20 year veteran, but you should be able to grasp the principles and theories presented in the text.  That’s the starting point for all of us.

- Fred Butterfield, CTP

First of all, check the study plan you made when you first started this project.  You need to be brutally honest with yourself.  Was your plan realistic, or were you ‘optimistic’ about yourself, your time, and your study habits, when you put it together?  If you were optimistic, you need to re-visit your plan using your recent experience as a yard stick to modify your plan.  More than anything else, it is important to be honest with yourself.

Okay, you’ve re-evaluated your study plan and you can still get it done, but you want to take what steps you can to improve your chances of passing.  While this has been fun, it’s not so much fun you want to do it several more times.  At the outset, I advised you to work first on the chapters which you knew little about.  Now, it’s getting down to crunch time and that calls for a modification to your study plan.

According to the AFP website, there is a breakdown of the number of questions per chapter.  Approximately 94 questions (63%) on the test are taken from 8 chapters of the BOK, not counting the 20 unscored questions.  If you have determined that there is still time for you to study the material in time for the test, I would suggest focusing on those chapters with the highest question counts and working to the chapters with the lowest question counts.  Don’t misunderstand, all of the information is important and you never know which part will be more important to you until you’re asked, but this is a strategy to help you pass the test first.  Once you have accomplished that, you can keep the BOK on your desk as a reference book. I certainly do!

- Fred Butterfield, CTP

Just in case you haven’t noticed, there are lots of questions, not only in the BOK, but in the study stuff, the online study stuff, the pre-test, the post test, the chapter tests, and even into your nightmares and daydreams. Why are there so many questions, and where do they all come from?

The questions in each chapter of the BOK are from the author and the committee subject matter experts that contributed to that chapter.  They are written to focus your attention on points the committee and the author feel are important or easily misunderstood.  They are not written to test your memory, but to test whether or not you understand the theories and concepts presented in the material.  If you understand the theories and concepts, you can probably figure out the answer to questions on the test.  If you don’t, you need to spend more time on the material.

The questions in the various study aids come from a different group of people.  They are as knowledgeable about the material as the committee and the author, but they have different experiences and backgrounds.  The questions they write are intended to be similar to the test questions, but different.  The purpose behind them is to give you some exposure to the kinds of questions, and the structure, that you will experience when you take the test.  These questions again are on the same material, brought from a different background and experience.

If you purchased the Learning System Treasury from AFP, with on-line testing and review capabilities, the questions included in it are more of the same , but from another group of volunteer subject matter experts, again with different experience and backgrounds.  AFP makes an intentional effort to incorporate as broad a spectrum of experience and difference in application as they possibly can.  This is for your benefit, to show you in the most practical way possible, that the theories and principles presented in the BOK apply and can be used in any business, in any market.

- Fred Butterfield, CTP

I was talking with some associates not long ago about an exam that a few of us had taken recently.  We were trading thoughts on the difficulty of the exam and how we thought we had done, when one of the guys said he had failed because he couldn’t get in to take the exam.  Since none of the rest of us had experienced any difficulty whatever, there was an immediate request for details.  To make a long story short, he had never been to the testing facility before, it was in a part of town unfamiliar to him, he got a late start and then got lost, and so missed his allotted window for the test.

That got me to thinking.  While I’ve never had that particular problem (I’m the guy that sets out two hours early to a place he’s never been and gets there with lots of time to spare), I’ve talked to others that have had near failures because of traffic, getting lost, etc.  When you get somewhere early, you can always use the extra time to relax, review your note cards one more time, or practice your yoga.  When you’re late, you’ve already raised your tension level with worry about missing the exam, not to mention whatever reason(s) caused your delay.

Once you have the address for testing facility, take the time to drive by it on a lunch hour or a weekend.  Listen to the daily traffic reports to see if, or when, there are traffic problems in that area.  Finally, on test day, make sure and leave with lots of time “just in case.”   Like I said, when you get there early, you get a better parking spot, and you can use the extra time to relax or review your note cards once again.  Either way, you’ll be in much better shape mentally to go in and give it your best.

-          Fred Butterfield, CTP

When you have a calculation question, hopefully the formula will appear in the air in front of you and show you the answer. If that doesn’t happen, take your best estimate at it.  Before you mark an answer, look at what you’ve come up with and compare it to the answers provided.  Think logically about your answer in making the  comparison.  If there is a difference in the fourth position to the right of the decimal, you’re probably right on track.  If your answer is 472.8491 and the answer choices are all less than 10.0000, you probably have the wrong formula.  This might sound very elementary to you as you read this, but it has happened and it is true.

In a calculation question, you will be given everything you need to know to answer the question.  If the first thing that pops into your head when you’ve read the question is “They didn’t tell me something”, you haven’t read the question thoroughly and completely or you didn’t recognize an alternate presentation of one of the variables.  Here’s an example:  There are formulas that require the calculation of a daily rate and include something along the lines of (annual rate divided by 365) to get to the daily rate.  What you want to watch out for is a question that gives you the daily rate as part of the given information, thus simplifying the formula by eliminating one step.  If you follow the formula and divide the rate again, your answer is going to be off.  That’s where the logical comparison should take place.  When there is a significant difference between your calculated answer and the answer choices, re-read the question first, looking specifically at how the variables provided are labeled.  You may find that something like the example has been done.

Now, there are some of you that may feel you have been tricked by this.  My response is “Just wait, because in the business world you almost never get the information you need, in the form you need it in, to do the analysis you’re asked to provide.”   This means that you’ll need to recognize what you’ve been given, and how you may need to change it, to make your analysis correct.  There are any number of reasons why you get what you get; “This is what the bank (customer) provides” , ”This comes from XXX system and we can’t change it” , “The XXX Department provides this” and so on.

-          Fred Butterfield, CTP

Something I’ve noticed about many of the people that take the review course; they’re shy.  When I teach the class, I encourage and plan for questions.  Now, in some of the class formats, there isn’t a large amount of time for questions, so I make sure to tell the participants about study groups, on-line discussion groups, and any other resources for enlightenment.  One thing I recommend to everyone studying for the exam is to find a ‘study buddy’ to work with, and this should be someone (if at all possible) who is also studying for the exam.  Why? Because they’ll speak the same language you do.  Studying with a spouse or friend may work for you, but I’ve heard some funny stories about mix-ups that have occurred because the study partners’ understanding of a word or phrase was different from that used in the BOK.

Many of the regional associations sponsor study groups, or have member volunteers to answer questions about the exam.  There are others who read the AFP discussion group postings and respond to them via email. There are many people willing to answer questions and clarify the material.

There are also all the ‘Test your understanding’ questions at the end of a chapter.  I’ve found the most effective use for those to be two-fold.  Most importantly, for any chapter that covers a subject you feel you are competent in, flip to the end and answer the questions first.  Check your answers.  If they are correct, then move to another chapter.  If they’re not correct, then back-up and study the chapter with an open mind.  Remember – What is in the text is what will be tested, not how you do your job!

The other use for these questions is in that last week before you take the exam.  You’ve spent hours over the last several weeks studying the material and learning it as best you can.  The exam is coming up and there is absolutely not enough time to re-read the entire book.  Mark the questions at the end of each chapter and use them to guide your review before you take the exam.

-          Fred Butterfield, CTP

As you work your way through the BOK, you will see lots of calculations. For some of you, that will be THE MOST exciting thing you’ll learn. For the rest of you, it’s something that may give you sleepless nights and stomach cramps.

There are lots of calculations in Treasury and they’re all different, depending on what part of Treasury you find yourself working in. Any calculations that you are using regularly, you will probably set up in a spreadsheet or database for ease of use and you won’t give the others a second thought, until you’re asked about them. Then you’ll  pick up the BOK, look up the calculation, and provide the answer. Applying this perspective to the test, there will be calculation questions, no doubt at all. If you can learn the general types of calculations (ratios, turnovers, etc.) you’ll have a better chance of remembering what variables are involved and the calculation. If you try to remember each individual calculation, you’ll probably want to have the your address tattooed on your arm so the nice person who finds you wandering the street mumbling to yourself can take you home.

While calculations are important, it is far more important to understand what the calculation results are illustrating and how to interpret those results. The BOK, in its presentation of the material, is explaining what the results mean and how to understand them in a ‘best practice’ but it is still up to you to understand why that result may be important or may be meaningless. Understanding the ‘why’ of something, whether it is a calculation or a procedure or a process, makes the parts more understandable and much more memorable.

So, the bottom line is to try and understand why the calculations are important and how they help decision making. If you can’t remember a formula , don’t let it drive you crazy. Move on to the next item.

Remember, no one knows your actual final score except AFP, and they don’t tell anyone. You either pass or you don’t.  Just try to do the best you can.

- Fred Butterfield, CTP

Who am I?

I have been a member of AFP since 1996. I passed my CTP (originally a CCM) in 1998, after failing to pass the exam in 1997. I was given the task of creating a Treasury department at the company I work for, something I had never done before, and wasn’t real sure how to accomplish. Being asked questions about things I had barely heard of was what sent me searching for answers. I began to find those answers in the body of knowledge, which evolved into the Essentials of Treasury Management, 3^rd Edition that we have today.  I saw the certification as a very focused means to acquire knowledge I didn’t possess in a field I found extremely interesting. Since then, the field has grown and become more than I had ever imagined.

I have spoken to many people at the annual conferences and in the classes I have taught in the last few years, and have discovered that, in many ways, I am no different than many of the folks out there. This makes me heave a great sigh of relief and it should do the same for you.

Why? Because you’re not crazy for taking on the challenge of attaining your certification. As a matter of fact, you’ve got lots of company and it’s all good. Don’t think that it’s going to be easy, however. Nothing could be further from the truth. As a matter of fact, if you’re looking for something easy, I’d suggest you look elsewhere. Treasury is a fascinating field with more parts and pieces and offshoots than you can imagine. It is an opportunity to explore the vast universe of business where there is almost no limit to what can be.

It is my intention to use this blog to share with you as much of what I have learned as a CTP teacher, and as a practitioner in Treasury, as I can squeeze into these postings. Something I have said on several occasions is that there is no one, true way. That belief places a very large responsibility on those of us that accept it because we will be going new places, finding new direction, and otherwise defining what will be here tomorrow. This certification helps all of us to stay on the right track as we move forward.

- Fred Butterfield, CTP