Drop Down selections based on "master" list

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Is there a way of creating a dropdown list, based on a seperate template?

For example, can i create a list of colours (Blue, Green, Yellow, Red, Black" in "sheet 01" then in sheet 2 have a drop down that looks at that list of colours in sheet 01 and i can select these?

Then if i add new colours to sheet 01, the dropdown list is automaticaly updated?

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