- A
PE routers use MP-BGP to exchange customer VPN routes with other PE routers.
Correct because MP-BGP is used to carry VPNv4 routes between PE routers, including the VPN label and route distinguisher.
- B
The MPLS label stack in an MPLS VPN packet contains only a single label that identifies the egress PE.
Why wrong: Incorrect because the MPLS label stack typically contains two labels: an outer transport label (IGP label) and an inner VPN label.
- C
P routers must maintain a full routing table for all customer VPNs to forward traffic correctly.
Why wrong: Incorrect because P routers only need to know how to reach PE loopbacks; they do not need customer VPN routes.
- D
The VPN label is assigned by the ingress PE and used by the egress PE to determine the outgoing interface.
Why wrong: Incorrect because the VPN label is assigned by the egress PE and advertised via MP-BGP; the ingress PE pushes that label.
- E
The inner VPN label is used by the egress PE to forward the packet to the correct customer VRF.
Correct because the egress PE pops the outer label and uses the inner VPN label to identify the VRF and forward the packet to the correct CE.
Quick Answer
The answer is that the inner VPN label is used by the egress PE to forward the packet to the correct customer VRF. This is because MPLS Layer 3 VPN operation relies on a two-label stack: an outer transport label for core switching and an inner VPN label assigned by the egress PE to identify the specific VRF and customer interface. The ingress PE pushes both labels after performing a VRF lookup, while core routers swap only the outer label, completely unaware of customer routes. On the ENCOR 350-401 exam, this concept tests your understanding of MP-BGP’s role in distributing VPN labels and the separation of provider and customer routing. A common trap is thinking the VPN label directs traffic to the ingress PE or that core routers need customer route knowledge. Remember the memory tip: “Outer for the core, inner for the door”—the outer label gets you across the core, and the inner VPN label opens the correct VRF door at the egress PE.
CCNP WAN Technologies Practice Question
This 350-401 practice question tests your understanding of wan technologies. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
Which two statements about MPLS Layer 3 VPNs are true? (Choose two.)
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
PE routers use MP-BGP to exchange customer VPN routes with other PE routers.
In MPLS Layer 3 VPNs, the provider edge routers participate in customer routing via MP-BGP, and the MPLS label stack includes both an outer transport label and an inner VPN label. The VPN label is used to identify the correct VRF and egress PE, not the ingress PE. The provider core routers do not need to know customer routes; they only switch based on the outer label. The VPN label is assigned by the egress PE, not the ingress PE.
Key principle: NAT direction and interface roles matter as much as the IP address mapping. Inside/outside designation controls which traffic is translated.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
PE routers use MP-BGP to exchange customer VPN routes with other PE routers.
- ✗
The MPLS label stack in an MPLS VPN packet contains only a single label that identifies the egress PE.
Why it's wrong here
Incorrect because the MPLS label stack typically contains two labels: an outer transport label (IGP label) and an inner VPN label.
- ✗
P routers must maintain a full routing table for all customer VPNs to forward traffic correctly.
Why it's wrong here
Incorrect because P routers only need to know how to reach PE loopbacks; they do not need customer VPN routes.
- ✗
The VPN label is assigned by the ingress PE and used by the egress PE to determine the outgoing interface.
- ✓
The inner VPN label is used by the egress PE to forward the packet to the correct customer VRF.
Common exam traps
Common exam trap: NAT rules depend on direction and matching traffic
NAT is not only about the public address. The inside/outside interface roles and the ACL or rule that matches traffic are just as important.
Detailed technical explanation
How to think about this question
NAT questions usually test address translation, overload/PAT behaviour, static mappings and whether the right traffic is being translated. Read the interface direction and address terms carefully.
KKey Concepts to Remember
- Static NAT maps one inside address to one outside address.
- PAT allows many inside hosts to share one public address using ports.
- Inside local and inside global describe the private and translated addresses.
- NAT ACLs identify traffic for translation, not always security filtering.
TExam Day Tips
- Identify inside and outside interfaces first.
- Check whether the scenario needs static NAT, dynamic NAT or PAT.
- Do not confuse NAT matching ACLs with normal packet-filtering intent.
Key takeaway
NAT direction and interface roles matter as much as the IP address mapping. Inside/outside designation controls which traffic is translated.
Real-world example
How this comes up in practice
A small business has 20 workstations on the 192.168.1.0/24 network and one public IP from its ISP. The router uses PAT (NAT overload) so all 20 devices share one public address using different source ports. NAT questions test whether you understand the four address terms and which direction each translation applies.
What to study next
Got this wrong? Here's your next step.
Review the four NAT address types (inside local, inside global, outside local, outside global), PAT port overload, and static vs dynamic NAT use cases. Then practise related 350-401 NAT questions on configuration and troubleshooting.
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FAQ
Questions learners often ask
What does this 350-401 question test?
WAN Technologies — This question tests WAN Technologies — Static NAT maps one inside address to one outside address..
What is the correct answer to this question?
The correct answer is: PE routers use MP-BGP to exchange customer VPN routes with other PE routers. — In MPLS Layer 3 VPNs, the provider edge routers participate in customer routing via MP-BGP, and the MPLS label stack includes both an outer transport label and an inner VPN label. The VPN label is used to identify the correct VRF and egress PE, not the ingress PE. The provider core routers do not need to know customer routes; they only switch based on the outer label. The VPN label is assigned by the egress PE, not the ingress PE.
What should I do if I get this 350-401 question wrong?
Review the four NAT address types (inside local, inside global, outside local, outside global), PAT port overload, and static vs dynamic NAT use cases. Then practise related 350-401 NAT questions on configuration and troubleshooting.
What is the key concept behind this question?
Static NAT maps one inside address to one outside address.
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Same concept, more angles
1 more ways this is tested on 350-401
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. Which two statements about MPLS Layer 3 VPNs are true? (Choose two.)
medium- ✓ A.PE routers use MP-BGP to exchange VPNv4 routes that include the route distinguisher and the VPN label.
- B.P routers in the MPLS core must maintain a full routing table for each customer VRF.
- C.CE routers must run MPLS and participate in the label distribution with the PE router.
- ✓ D.Each VRF on a PE router maintains a separate routing table and forwarding table per customer.
- E.The MPLS label stack in a Layer 3 VPN always contains exactly one label.
Why A: MPLS Layer 3 VPNs use MP-BGP to exchange VPNv4 routes between PE routers, and each VRF maintains a separate routing table per customer. The P routers do not need to know customer routes, and the CE router does not run MPLS. The label stack includes both an IGP label and a VPN label.
Last reviewed: Jun 18, 2026
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