The correct option is Microsoft 365 Group.

A Microsoft 365 Group provides a shared mailbox and calendar and a SharePoint document library and Teams integration and Planner so members can share files documents email messages and calendar events. It also supports guest access through Azure AD B2B which lets partner company accounts be invited to the group and collaborate with your employees across mail calendar and files.

Security group is meant for granting access to resources and for applying permissions in Azure AD and Active Directory. It does not provide a shared mailbox calendar or document library and so it does not meet the collaboration and cross organization sharing requirements in the scenario.

Distribution group is used only to send email to a set of recipients and it does not provision a shared mailbox calendar or SharePoint site. That makes it unsuitable when you need shared files documents and calendar events rather than just broadcasting messages.

Mail enabled security group combines email delivery with security group membership but it still does not create the collaboration artifacts such as a shared mailbox calendar or document library. It is not designed to provide the same cross organization collaboration experience that a Microsoft 365 Group offers.

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