Answer: D
Correct answer: It places faint text or an image behind the content of every page
A watermark is faint text or an image placed behind the body text, repeating on every page. It is applied from the Design tab, and Word supplies presets such as CONFIDENTIAL, DRAFT and URGENT, with custom text or a picture also possible. Its purpose is to mark the status of a document without interfering with reading it - and to make an unauthorised photocopy identifiable. Technically it lives in the header layer, which is why it repeats automatically and why it can only be edited by opening the header area. That also means a document divided into sections can carry a different watermark in each, or none. It is a visual mark, not a security feature: the second option describes Encrypt with Password, and Restrict Editing is a further protection. Anyone who can open a watermarked file can remove the watermark. The third option describes Page Borders, on the same tab.