The chapter discusses three main functions of a banking system Classify each of the following by the function it best represents. a. Aaron can get cash out of the ATM at any time of day or night. Diversify risk. Intermediate between savers and borrowers. Provide liquidity, b. Instead of lending all her savings out to one borrower, Barbara?s bank makes the money In her savings account available to a variety of firms, with different characteristics and risk profiles, wishing to invest. C Provide liquidity. Intermediate between savers and borrowers. Diversify risk. c. When Charlies car suddenly breaks down, he can quickly withdraw funds from his savings account to pay the mechanic and rent a car. Provide liquidity. DiversIfy risk. Intermediate between savers and borrowers. d. Donna can get start-up funds for her new hair salon from a bank, Instead of having to find people In her neighborhood willing to lend their extra money. Diversify risk. Intermediate between savers and borrowers. Provide liquidity. Solution diversification of risk the diversification of risk means that wide variety of investment within a portfolio. the diversification can be take into account the risk management technique that takes into account for different kinds of investment,that gives higher returns and lower risk. intermediate between savers and borrowers in the modern definition given by economics for the financial institutions are the intermediate between savers and the borrowers. the institution are played intermediate role between the savers and the borrowers. they can easily write a document for this relationship. that is what we called the primary securities. provide liquidity. we know that liquidity means that the asset can be easily converted into cash. the cash is the most liquid asset than any other asset. 1. answer B 2.answer D 3.answer A 4.answer C.