How does a zero-coupon bond differ from other bonds?

A zero-coupon bond is distinct from other types of bonds primarily in its payment structure. Unlike traditional bonds that typically pay periodic interest to investors—often referred to as coupon payments—a zero-coupon bond does not make any interest payments throughout its lifetime. Instead, it is issued at a discount to its face value, which means that investors purchase it for less than its maturity value. At maturity, the bondholder receives the face value of the bond.

This difference in payment structure is key to understanding how zero-coupon bonds function. Investors realize their return not through regular interest payments, but rather through the appreciation of the bond's value as it reaches maturity. Therefore, option C accurately describes the nature of a zero-coupon bond, highlighting both its lack of periodic interest payments and its issuance at a discount.

The other options describe characteristics typical of standard coupon bonds or incorrect attributes not associated with zero-coupon bonds, which further emphasize why option C is the correct choice.