Reading 14 Example 32

CFA Level III Fixed Income
#1

The solution has the origional iTraxx-Xover 5 year priced at 95.75 per $100, or 0.9575 = 1 - 4.25 * (5%-4%). Isn’t it supposed to be 1 + 4.25 * (5%-4%)?

Same for the new iTraxx-Xover 5 year pricing formula 0.9150 = 1 - 4.25 * (5% - 3%). Isn’t it supposed to be 1 + 4.25 * (5%-3%)?

Errata didn’t say anything about this. Please help me undertand this, TIA!

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#2

In that problem, they expressed E [ExcessSpread] ≈ Spread0 −(EffSpreadDur × ΔSpread) − (POD × LGD) but shown calculation as E [ExcessSpread] ≈ Spread0 −(EffSpreadDur × ΔSpread) + (POD × LGD) that means expected loss turns out to expected gain. Can you pls shed light in this?