Select Prepare from the left-hand menu.
Click
on Encrypt Document from the resulting menu shown on the
right.

The
Encrypt Document dialog box will appear. Enter a
password for the Word document.

Type in the password once more for confirmation and
click on the Ok button.

After you press the
Ok button, this window will close without asking for further
verification. Your Word 2007 document is now successfully encrypted.
When you encrypt Word 2007 documents, Microsoft Office automatically
saves the document with a 128-bit advanced encryption.
No-one can open this
document without entering the password. If anyone clicks on the document
to open it, he will be prompted to enter a password.