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Preferences: Image
Advantages of linked images:
• Documents are smaller.
• Documents open and save faster.
• If the linked image is changed, the Create document will show the changed image. This can be an advantage or disadvantage, depending on your goals.

Advantages of copied images:
• The images stay with your document and will be transferred with your document.
• The images can't be accidentally lost by being moved or removed from your folders.

You can tell whether an image is linked or copied by bringing up the
Object Info panel (double-click on the image or choose Tools->Show Info (Shift-Command-I) and click on the Object tab. If the image is linked, the Link field will contain the image's full path. If the image is copied, the Link field will prefix the image's file name with the word "Embedded: ".

If you use linked images and want to mail or transfer your Create document, choose File->Embed Linked Images… to make sure all images are included within your document. Since this operation is not undoable, you may want to embed the images in a copy of the document.