Bid-ask spreads apply not only to publicly traded shares (where these are quoted publicly on lit or formal exchanges and are quoted privately in the OTC markets/venues), but also to private equity. Based on the life-cycle of the firm and which types of investment transactions across the life-cycle of the firm do you expect to generate wider bid- ask spreads?

Which do you expect will generate narrower bid-ask spreads?

What does this tell us about liquidity risk inherent in different types of investments that underlie different stages of firm life-cycle? Explain your answers.