In cryptography, you always assume the "bad guy" has the encryption algorithm (indeed, many algorithms such as DES, Triple DES, AES, etc. are public domain). What the bad guy lacks is the key used to complete that algorithm and encrypt/decrypt information. Therefore, protection of the key, controlled distribution, scheduled key change, timely destruction, and several other factors require careful consideration. All of these factors are covered under the umbrella term of "key management".
Another significant consideration is the case of "data encryption as a method of protecting data" as the question states. If that data is to be stored over a long period of time (such as on backup), you must ensure that your key management scheme stores old keys for as long as they will be needed to decrypt the information they encrypted.
The other answers are not correct because:
"It should sometimes be used for password files." - Encryption is often used to encrypt passwords stored within password files, but it is not typically effective for the password file itself. On most systems, if a user cannot access the contents of a password file, they cannot authenticate. Encrypting the entire file prevents that access.
"It is usually easily administered." - Developments over the last several years have made cryptography significantly easier to manage and administer. But it remains a significant challenge. This is not a good answer.
"It makes few demands on system resources." - Cryptography is, essentially, a large complex mathematical algorithm. In order to encrypt and decrypt information, the system must perform this algorithm hundreds, thousands, or even millions/billions/trillions of times. This becomes system resource intensive, making this a very bad answer.
Reference:
Official ISC2 Guide page: 266 (poor explanation)
All in One Third Edition page: 657 (excellent explanation)
Key Management - Page 732, All in One Fourth Edition

Explanation/Reference:
Electronic vaulting is defined as "a method of transferring bulk information to off-site facilities for backup purposes". Remote Journaling is the same concept as electronic vaulting, but has to do with journals and transaction logs, not the actual files.
Source: HARRIS, Shon, All-In-One CISSP Certification Exam Guide, McGraw-Hill/Osborne, 2002, chapter
9: Disaster Recovery and Business continuity (page 619).

Explanation/Reference:
Transmission Control Protocol/Internet Protocol (TCP/IP) is the common name for the suite of protocols that was developed by the Department of Defense (DoD) in the 1970's to support the construction of the internet. The Internet is based on TCP/IP.
The Internet protocol suite is the networking model and a set of communications protocols used for the Internet and similar networks. It is commonly known as TCP/IP, because its most important protocols, the Transmission Control Protocol (TCP) and the Internet Protocol (IP), were the first networking protocols defined in this standard. It is occasionally known as the DoD model, because the development of the networking model was funded by DARPA, an agency of the United States Department of Defense.
TCP/IP provides end-to-end connectivity specifying how data should be formatted, addressed, transmitted, routed and received at the destination. This functionality has been organized into four abstraction layers within the DoD Model which are used to sort all related protocols according to the scope of networking involved.
From lowest to highest, the layers are:
The link layer, containing communication technologies for a single network segment (link), The internet layer, connecting independent networks, thus establishing internetworking, The transport layer handling process-to-process communication,
The application layer, which interfaces to the user and provides support services.
The TCP/IP model and related protocols are maintained by the Internet Engineering Task Force (IETF).
The following answers are incorrect:
IP/UDP/TCP. This is incorrect, all three are popular protocol and they are not considered a suite of protocols.
IP/UDP/ICMP/TCP. This is incorrect, all 4 are some of the MOST commonly used protocol but they are not called a suite of protocol.
IMAP/SMTP/POP3 . This is incorrect because they are all email protocol and consist of only a few of the protocol that would be included in the TCP/IP suite of protocol.
Reference(s) used for this question:
Hernandez CISSP, Steven (2012-12-21). Official (ISC)2 Guide to the CISSP CBK, Third Edition ((ISC)2 Press) (Kindle Locations 5267-5268). Auerbach Publications. Kindle Edition.
http://en.wikipedia.org/wiki/Internet_protocol_suite

Section: Access Control
Explanation/Reference: HARRIS, Shon, All-In-One CISSP Certification Exam Guide, 2001, McGraw-Hill/Osborne, page
139;
SNYDER, J., What is a SMART CARD?.
Wikipedia has a nice definition at: http://en.wikipedia.org/wiki/Tamper_resistance Security Tamper-resistant microprocessors are used to store and process private or sensitive information, such as private keys or electronic money credit. To prevent an attacker from retrieving or modifying the information, the chips are designed so that the information is not accessible through external means and can be accessed only by the embedded software, which should contain the appropriate security measures.
Examples of tamper-resistant chips include all secure cryptoprocessors, such as the IBM 4758 and chips used in smartcards, as well as the Clipper chip.
It has been argued that it is very difficult to make simple electronic devices secure against tampering, because numerous attacks are possible, including:
physical attack of various forms (microprobing, drills, files, solvents, etc.) freezing the device applying out-of-spec voltages or power surges applying unusual clock signals inducing software errors using radiation measuring the precise time and power requirements of certain operations (see power analysis) Tamper-resistant chips may be designed to zeroise their sensitive data (especially cryptographic keys) if they detect penetration of their security encapsulation or out-of-specification environmental parameters. A chip may even be rated for "cold zeroisation", the ability to zeroise itself even after its power supply has been crippled.
Nevertheless, the fact that an attacker may have the device in his possession for as long as he likes, and perhaps obtain numerous other samples for testing and practice, means that it is practically impossible to totally eliminate tampering by a sufficiently motivated opponent. Because of this, one of the most important elements in protecting a system is overall system design. In particular, tamper-resistant systems should "fail gracefully" by ensuring that compromise of one device does not compromise the entire system. In this manner, the attacker can be practically restricted to attacks that cost less than the expected return from compromising a single device (plus, perhaps, a little more for kudos). Since the most sophisticated attacks have been estimated to cost several hundred thousand dollars to carry out, carefully designed systems may be invulnerable in practice.

The Key Distribution Center (KDC) holds all users' and services' cryptographic keys. It provides authentication services, as well as key distribution functionality. The Authentication Service is the part of the KDC that authenticates a principal. The Key Distribution Service and Key Granting Service are distracters and are not defined Kerberos components. Source: WALLHOFF, John, CISSP Summary 2002, April 2002, CBK#1 Access Control System & Methodology (page 3)