Final answer:
Amortization is the process of gradually reducing a debt over time, and it applies to both intangible assets and loans such as a 30-year mortgage. The value of a mortgage can be assessed by what others are willing to pay in the secondary loan market.
Step-by-step explanation:
The statement that is true of amortization is C. Amortization is the gradual reduction of a debt over time. Unlike depreciation which applies to tangible assets, amortization is typically associated with intangible assets or loans.
It is an accounting technique used to periodically lower the book value of a loan or an intangible asset over a set period of time. Through amortization, a portion of the principal and the interest on the loan are paid with each payment, resulting in the gradual reduction of the outstanding balance of the loan.
When it comes to loans, such as a 30-year mortgage loan mentioned in the context provided, the family will repay the bank over the next 30 years, and this loan is considered an asset to the bank. The value of this type of long-term loan can be measured by what another party in the market is willing to pay for it. Banks may sell these loans in the secondary loan market to other banks or financial institutions who will then collect the payments.