What is a word processing file that contains settings for margins, line spacing, and formatting called?

A word processing file that contains predefined settings for margins, line spacing, and formatting is referred to as a template. Templates serve as foundational structures for documents, making it easier for users to maintain consistency in formatting and layout across multiple documents. By using a template, an individual can quickly generate a new document that adheres to established styles without needing to set each formatting option from scratch each time. This enhances efficiency and ensures a professional appearance in various types of documents, from letters to reports.

The other options do not inherently encapsulate the concept of having predefined settings for document formatting. A draft refers to an initial version of a document that may still undergo revisions. A document is a general term for any written work and does not specifically denote the presence of formatting settings. A layout typically describes the arrangement of visual elements on a page rather than the document format settings. Thus, the term template accurately conveys the purpose and function of a file that stores these specific formatting settings in word processing software.