One of the correct statements is:
Digest authentication uses an encrypted password for increased security.
In digest authentication , the password is hashed not encrypted.
According to this article :https://danielmiessler.com/study/encoding-encryption-hashing-obfuscation/
Hash and encryption are different.
Hash is to make sure the hashed password has not been changed after the password is sent to guarantee integrity.
Encryption is to make sure the encrypted password is confidential.