Prijatelj koji živi blizu reke sada radi u banci.

It has a very typical Serbian structure:

• Prijatelj = the main noun, the subject
• koji živi blizu reke = a relative clause describing that noun
• sada = an adverb meaning now
• radi u banci = the main predicate, works in a bank

So the sentence is built like:

• friend
• who lives near the river
• now works in a bank

Koji here means who or that.

It introduces a relative clause and connects prijatelj with živi blizu reke.

So:

• prijatelj koji živi... = the friend who lives... / the friend that lives...

In this sentence, koji refers back to prijatelj.

Because koji must agree with the noun it refers to.

Here it refers to prijatelj, which is:

• masculine
• singular
• nominative

Also, koji is the subject of živi, so nominative is the correct case.

That is why you get koji.

If the noun were feminine, you would get koja:

• Prijateljica koja živi blizu reke...

Usually no, not in this kind of normal finite clause.

In English, you can say:

• the friend who lives near the river
• the friend that lives near the river
• sometimes even the friend living near the river

In Serbian, the normal version is:

• prijatelj koji živi blizu reke

You generally do not just drop koji and keep the same structure.

Both are 3rd person singular present tense forms.

That is because the subject is prijatelj, which is singular.

• živi = lives
• radi = works

In the present tense, Serbian verbs do not show gender. So živi and radi are simply the forms for he/she/it lives/works, depending on the subject.

Here the subject noun prijatelj is masculine, so in meaning it is he lives and he works, but the verb form itself is just 3rd person singular.

Because blizu normally takes the genitive case.

The base form is:

• reka = river

Its genitive singular form is:

• reke

So:

• blizu reke = near the river

This is a very common pattern in Serbian:

• blizu kuće = near the house
• blizu škole = near the school
• blizu grada = near the city

Because u with a static location usually requires the locative case.

Here the meaning is location:

• the friend works in a bank

So:

• banka = bank
• u banci = in the bank / in a bank

This is different from motion toward a place. For example:

• Ide u banku = He is going to the bank

There, u expresses movement, so Serbian uses the accusative:

• banku

So the contrast is:

• u banci = in the bank, at the bank, inside the bank as a location
• u banku = into the bank, to the bank as a destination

Because Serbian has no articles.

So prijatelj can mean:

• a friend
• the friend
• sometimes just friend, depending on context

Likewise, u banci can mean:

• in a bank
• in the bank
• at a bank

Context tells you which one is intended.

If Serbian wants to be more specific, it can use words like taj meaning that:

• Taj prijatelj... = That friend...

Yes. Prijatelj is a masculine noun and normally means a male friend.

For a female friend, you would usually say:

• prijateljica

Then the relative pronoun would also change:

• Prijateljica koja živi blizu reke sada radi u banci.

So the grammar agrees with the gender of the noun.

Yes. Serbian word order is fairly flexible.

The sentence as given is natural and neutral:

• Prijatelj koji živi blizu reke sada radi u banci.

But you can move sada for emphasis:

• Sada prijatelj koji živi blizu reke radi u banci.
• Prijatelj koji živi blizu reke radi sada u banci.

These are all possible, but they can sound slightly different in focus or emphasis. The original version is a very normal choice.

A few sounds here are especially important for English speakers:

• j is pronounced like English y
  • so prijatelj starts roughly like pri-ya...
• ž sounds like the s in measure
  • so živi begins with that sound
• lj is a soft l sound, somewhat like the lli in million for many English speakers

Very roughly:

• prijatelj ≈ pree-YA-tely
• živi ≈ ZHEE-vee

These are only approximations, but they help get close.

Not necessarily.

Radi u banci means the person works in a bank or works at a bank. It tells you the workplace, not the exact job.

So the person could be:

• a banker
• a clerk
• a security guard
• an IT worker
• a cleaner

If you wanted to say specifically that someone is a banker, you would use a noun for the profession instead of just the workplace.