**Core Concept**
Androgen insensitivity syndrome (AIS) is a genetic condition where an individual with XY chromosomes is resistant to male hormones (androgens) such as testosterone. This resistance leads to the development of female secondary sex characteristics despite the presence of testes.

**Why the Correct Answer is Right**
In AIS, the body's cells are unable to respond to androgens due to mutations in the androgen receptor (AR) gene. As a result, the individual will develop female external genitalia, despite having testes and a Y chromosome. The testes will also produce Müllerian inhibiting substance, leading to the regression of the Müllerian ducts, which would otherwise develop into the uterus, fallopian tubes, and upper part of the vagina. The presence of testes will also lead to the production of anti-Müllerian hormone (AMH), which inhibits the growth of the Müllerian ducts.

**Why Each Wrong Option is Incorrect**
**Option A:** This statement is incorrect because individuals with AIS have testes, but they will not produce sufficient testosterone to stimulate the development of male secondary sex characteristics.
**Option B:** This statement is incorrect because the presence of testes in AIS individuals will lead to the production of Müllerian inhibiting substance, which will regress the Müllerian ducts.
**Option C:** This statement is incorrect because individuals with AIS will not develop male external genitalia due to their resistance to androgens.

**Clinical Pearl / High-Yield Fact**
A key point to remember is that individuals with AIS will have a 46,XY karyotype, testes, and female external genitalia, making it essential to perform a karyotype and assess the presence of testes in individuals with ambiguous genitalia.

**Correct Answer:** C. Individuals with androgen insensitivity syndrome have a 46,XY karyotype, testes, and female external genitalia.