Through the use of Public Key Infrastructure (PKI) the recipient’s identity can be positively verified by the sender.
The sender of the message knows he is using a Public Key that belongs to a specific user. He can validate through the Certification Authority (CA) that a public key is in fact the valid public key of the receiver and the receiver is really who he claims to be. By using the public key of the recipient, only the recipient using the matching private key will be able to decrypt the message. When you wish to achieve confidentiality, you encrypt the message with the recipient public key.
If the sender would wish to prove to the recipient that he is really who he claims to be then the sender would apply a digital signature on the message before encrypting it with the public key of the receiver. This would provide Confidentiality and Authenticity of the message.
A PKI (Public Key Infrastructure) enables users of an insecure public network, such as the Internet, to securely and privately exchange data through the use of public key-pairs that are obtained and shared through a trusted authority, usually referred to as a Certificate Authority.
The PKI provides for digital certificates that can vouch for the identity of individuals or organizations, and for directory services that can store, and when necessary, revoke those digital certificates. A PKI is the underlying technology that addresses the issue of trust in a normally untrusted environment.
The following answers are incorrect: The sender and recipient have reached a mutual agreement on the encryption key exchange that they will use. Is incorrect because through the use of Public Key Infrastructure (PKI), the parties do not have to have a mutual agreement. They have a trusted 3rd party Certificate Authority to perform the verification of the sender.
The channels through which the information flows are secure. Is incorrect because the use of Public Key Infrastructure (PKI) does nothing to secure the channels.
The sender of the message is the only other person with access to the recipient’s private key. Is incorrect because the sender does not have access to the recipient’s private key though Public Key Infrastructure (PKI).
Reference(s) used for this question: OIG CBK Cryptography (pages 253 -254)