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In this tutorial, we will learn how to create a letterhead in a Word document and add a watermark. Start by going to the layout tab, select narrow margins, choose A4 size, and insert a rectangle shape to cover the header. Use the shape format tab to customize the shape's fill color and outline. Use the edit points to adjust the shape as needed. Repeat the process to add a watermark, send it to the back, and adjust as necessary.