should we use spot rate to discount cash flows or should we do something before we can use it? which study session discussed this poiont? thanks.
Use appropriate rate to discount cf. If you have cash flows for next 4 years on semiannual basis, use corresponding semiannual spot rates to get the PV. Spot rate is BEY, as a 6-month spot rate is multiplied by 2 in order to get the annualized rate. This is discussed in the Fixed Income Analysis, SS on Bootstrapping.