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swap rate as average discount factor
in John hull's book, swap rate is used as the average discount factor for a seriers of cash flowssuppose Rs is the 2 yr swap rate(annual coupon), cash flow denoted by CF1, CF2...the present value is given by:PV = CF1/(1+Rs) + CF2/(1+Rs)^2cash flow is usually given by a bondbut i am unable to find out what's the rationale here to use swap rate in the denominatorits something like yield to maturity?usually i can only see libor rates at diff tenors are usedif swap rate is used, there be any arbitrage?