Compounding monthy will give you a greater Annual Percentage Yield.

It's all mathematical.

Whenever you have a deposit account in which you earn interest.

The interest earned can be calculated by the following

I = D [(1 + A/p)

A = the APR

p = the number of times compounded annually

n= the number of years.

D = the amount of your deposit.

If D = $1,000

If p = 12

If n = 1

If A = 6.0%

For 1 year you would have

I = $1,000 [ (1 + 0.12/12

If compounded annually you will have

I = $1,000 [ (1 + 0.12) - 1] = $120.00

The effective annual interest rate is:

E = 100% x[ ( 1 + .12/12)

Therefore the more times the compoundment yieds the greatest APY.

It's all mathematical.

Whenever you have a deposit account in which you earn interest.

The interest earned can be calculated by the following

I = D [(1 + A/p)

^{np }- 1]A = the APR

p = the number of times compounded annually

n= the number of years.

D = the amount of your deposit.

If D = $1,000

If p = 12

If n = 1

If A = 6.0%

For 1 year you would have

I = $1,000 [ (1 + 0.12/12

^{)12}-1] = $126.83If compounded annually you will have

I = $1,000 [ (1 + 0.12) - 1] = $120.00

The effective annual interest rate is:

E = 100% x[ ( 1 + .12/12)

^{12}- 1] = 12.683%Therefore the more times the compoundment yieds the greatest APY.