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In this tutorial, Ella Lima demonstrates how to insert a letterhead in MS Word. Begin by navigating to the Insert tab and selecting "Picture" to browse for the letterhead file on your hard drive. Once selected, click the Insert button. The letterhead will appear in the document but may not touch the borders, indicating its dimensions are smaller than the document size. To adjust this, right-click the picture, select "Size and Position," and set the height and width to 100%. Next, go to the "Text Wrapping" tab and choose the option behind text. Finally, adjust the letterhead's position by setting the horizontal alignment to center and ensuring it is relative to the page vertically.