Answer: payment-in-kind coupon bond.

**Explanation:** - **Option A (Incorrect):** A step-up coupon bond has a coupon rate that increases at predetermined dates, but it does not allow the issuer to pay interest by issuing additional bonds instead of cash. - **Option B (Incorrect):** A deferred coupon bond (or split coupon bond) delays coupon payments for an initial period and then pays higher coupons later. It does not permit interest payments in the form of additional bond amounts. - **Option C (Correct):** A payment-in-kind (PIK) coupon bond allows the issuer to pay interest by issuing additional bonds rather than cash, which aligns with the question's description. This feature is a key characteristic of PIK bonds.

Author: LeetQuiz Editorial Team