The answer is a managed identity, specifically a system-assigned managed identity, because it enables a VM-hosted app to authenticate to Azure Blob Storage for blob uploads without ever storing a storage account key or password on the VM. When enabled, Azure automatically creates a service principal in Azure AD for the VM, and the app can securely obtain an access token from the Azure Instance Metadata Service (IMDS) endpoint at 169.254.169.254, eliminating the need for any hardcoded credentials. On the AZ-104 exam, this scenario tests your understanding of identity-based authentication versus key-based access, and a common trap is choosing a shared access signature (SAS) token, which still requires storing a secret. Remember the memory tip: “No keys on the VM, just a token from IMDS” — think of the VM borrowing Azure AD’s identity to prove its own.
AZ-104 Manage Azure Identities and Governance Practice Question
This AZ-104 practice question tests your understanding of manage azure identities and governance. Match the stated requirement to the specific cloud service, access model, or configuration option — many options are valid in isolation but not for this scenario. 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.
A VM-hosted app needs to upload blobs without storing a storage account key or password on the VM. Which two authentication options meet this requirement? Select two.
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
System-assigned managed identity
System-assigned managed identity (Option A) is correct because it allows the VM to authenticate to Azure Blob Storage without storing any credentials on the VM. When enabled, Azure automatically creates a service principal in Azure AD for the VM, and the VM can obtain an access token from the Azure Instance Metadata Service (IMDS) endpoint (169.254.169.254) to authenticate to storage. This eliminates the need for any storage account key or password on the VM.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
✓
System-assigned managed identity
Why this is correct
A system-assigned managed identity lets the VM authenticate to Azure services without a stored secret.
Related concept
Read the scenario before looking for a memorised answer.
✓
User-assigned managed identity
Why this is correct
A user-assigned managed identity also avoids secrets on the VM and can be reused across resources.
Related concept
Read the scenario before looking for a memorised answer.
✗
Storage account access key in an application setting
Why it's wrong here
An access key is a long-lived secret, so it violates the requirement to avoid stored credentials.
✗
Shared access signature token saved on the VM
Why it's wrong here
A SAS token is still a secret and must be stored and rotated, so it does not meet the requirement.
✗
Anonymous public access to the container
Why it's wrong here
Anonymous access removes authentication, but it is not appropriate for a secure upload scenario.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates may confuse 'not storing a key or password on the VM' with 'using a credential that is stored elsewhere on the VM' — for example, a SAS token saved in a file or an access key in an app setting still counts as a stored credential, while managed identities provide credential-less authentication via Azure AD tokens.
Trap categories for this question
Scenario analysis trap
Anonymous access removes authentication, but it is not appropriate for a secure upload scenario.
Detailed technical explanation
How to think about this question
Managed identities use the Azure Instance Metadata Service (IMDS) to acquire OAuth 2.0 tokens for Azure AD authentication. The VM requests a token from IMDS at http://169.254.169.254/metadata/identity/oauth2/token, and the token is then used in the Authorization header of requests to Azure Storage. This approach supports Role-Based Access Control (RBAC) via the Storage Blob Data Contributor or Storage Blob Data Reader roles, allowing fine-grained permissions without managing secrets.
KKey Concepts to Remember
Read the scenario before looking for a memorised answer.
Find the constraint that changes the correct option.
Eliminate answers that are true in general but not in this case.
TExam Day Tips
→Watch for words such as best, first, most likely and least administrative effort.
→Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A media company stores terabytes of video archives that are accessed once a year for audit purposes. Moving these objects to a cold storage tier (Azure Archive, S3 Glacier, or Google Nearline) costs a fraction of hot storage. Questions like this test whether you understand storage tiers, access frequency tradeoffs, and retrieval latency requirements.
Related glossary terms
Concepts from this question explained
These glossary pages explain the core terms tested in this AZ-104 question in full detail.
Manage Azure Identities and Governance — This question tests Manage Azure Identities and Governance — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: System-assigned managed identity — System-assigned managed identity (Option A) is correct because it allows the VM to authenticate to Azure Blob Storage without storing any credentials on the VM. When enabled, Azure automatically creates a service principal in Azure AD for the VM, and the VM can obtain an access token from the Azure Instance Metadata Service (IMDS) endpoint (169.254.169.254) to authenticate to storage. This eliminates the need for any storage account key or password on the VM.
What should I do if I get this AZ-104 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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Question Discussion
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