What kind of investment typically pays interest at maturity instead of periodic payments?

A zero coupon bond is an investment that is sold at a discount to its face value and does not make periodic interest payments during its life. Instead, interest is effectively accumulated and paid at maturity when the bond is redeemed for its full face value. This structure allows investors to benefit from the difference between the purchase price and the maturity value as interest income.

In contrast, convertible bonds can pay periodic interest and provide the option to be converted into equity. Subprime mortgages refer to specific types of loans for borrowers with lower credit ratings and typically involve regular payment structures. Income-generating stocks, as the name implies, provide dividends to shareholders, usually on a regular basis, which is a different mechanism than the one employed by zero coupon bonds. Thus, the defining characteristic of a zero coupon bond is its payment structure, which aligns precisely with the question's description.