Which of the following best describes the process of amortization?

The process of amortization is best described as the gradual reduction of debt through a series of regular payments over time. This method is commonly used in loans such as mortgages or car loans, where the borrower makes fixed payments at specified intervals. Each payment consists of two components: a portion that reduces the principal amount owed (the original loan amount) and a portion that covers interest on the outstanding balance of the loan. As the borrower continues to make payments, the loan balance decreases until it is fully repaid by the end of the term.

In contrast, the other options do not accurately capture the essence of amortization. Increasing investment value pertains to growth in assets, making a one-time payment describes a different financial transaction, and accruing interest over time refers to interest accumulation rather than the structured repayment process involved in amortization. Thus, the focus on regular payments directly addressing and reducing debt clearly characterizes amortization.