The options for investment available are an annual rate of interest of 4.2% compounded monthly or an annual rate of interest of 6.8% compounded annually.
In the former case, the monthly rate of interest is 4.2/12 %. An amount of $100 deposited for one year is increased to $100*(1+.042/12)^12 = 104.28
In the latter case, an amount of $100 is increased to $106.8 in a year.
This shows that a difference in interest rate of 2.6% cannot be accommodated for by compounding monthly instead of compounding annually.
It is better to invest at an interest rate of 6.8% compounded annually.