Monthly (12/Yr) compounding has a compounding frequency of twelve.Quarterly (4/Yr) compounding has a compounding frequency of four,.Annual (1/Yr) compounding has a compounding frequency of one,.But if you are not sure what compounding is, this definition will be meaningless to you… To understand this term, you should know that compounding frequency is an answer to the question How often is the interest added to the principal each year? In other words, compounding frequency is the time period after which the interest will be calculated on top of the initial amount. Most financial advisors will tell you that compound frequency is the number of compounding periods in a year.
