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Step 1: Click the File tab -> Info -> Protect Document -> Encrypt with Password

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Step 2: Type in the password and click OK.

Note: Tutorials on how to choose a good password is located at https://docs.rice.edu/confluence/display/ITTUT/Passwords

Step 3: Reenter password and click OK.

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Step 4: After choosing a password you should see that your document is encrypted.