Question 684 of 1,170

Manage Azure Identities and Governance →easyMultiple SelectObjective-mapped

Quick Answer

The answer is both system-assigned and user-assigned managed identities. These two identity types allow an Azure VM to authenticate to Azure Storage without storing any keys or passwords by leveraging Azure AD to obtain OAuth 2.0 tokens, which are passed in the Authorization header of storage requests. System-assigned is tied directly to a single VM and is created and deleted with it, while user-assigned is a standalone resource that can be reused across multiple VMs or services. On the AZ-104 exam, this question tests your understanding of managed identity types as a secretless authentication method, often appearing in scenarios where you must eliminate credential storage for security compliance. A common trap is confusing service principals or application registrations with managed identities, but remember that managed identities are Azure-managed and require no secret rotation. Memory tip: think of system-assigned as “born with the VM” and user-assigned as “bring your own identity.”

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 application must read blobs from Azure Storage without storing any keys or passwords. Which two identity types can the VM use to authenticate to Azure Storage? Select two.

Question 1easymulti select

Full question →

A
System-assigned managed identity, because it is tied to one VM and can request tokens without stored secrets.
A system-assigned managed identity is attached to one resource and avoids storing any secret in the application.
B
User-assigned managed identity, because it can be reused by multiple resources without embedding credentials.
A user-assigned managed identity can be shared and still provides secretless authentication to storage.
C
Storage account shared key, because it is the preferred credential when you want to avoid passwords.
Why wrong: A shared key is a secret credential, so it does not meet the no-secrets requirement.
D
Basic authentication with a storage account name and password, because Azure Storage supports that model directly.
Why wrong: Azure Storage does not use basic username and password authentication for blob access.
E
Anonymous public access, because it lets the VM read blobs without any authentication at all.
Why wrong: Anonymous access is only suitable for public content and is not a secure identity-based approach.

Full breakdown with real-world context →

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

✓

System-assigned managed identity, because it is tied to one VM and can request tokens without stored secrets.

System-assigned managed identity is correct because it is directly tied to a single VM and can request tokens from Azure AD without storing any secrets or keys. The VM uses its managed identity to authenticate to Azure Storage by obtaining an OAuth 2.0 token, which is then passed to the storage service via the Authorization header. This eliminates the need for any stored credentials, meeting the requirement of not storing keys or passwords.

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, because it is tied to one VM and can request tokens without stored secrets.
Why this is correct
A system-assigned managed identity is attached to one resource and avoids storing any secret in the application.
Related concept
Read the scenario before looking for a memorised answer.
✓
User-assigned managed identity, because it can be reused by multiple resources without embedding credentials.
Why this is correct
A user-assigned managed identity can be shared and still provides secretless authentication to storage.
Related concept
Read the scenario before looking for a memorised answer.
✗
Storage account shared key, because it is the preferred credential when you want to avoid passwords.
Why it's wrong here
A shared key is a secret credential, so it does not meet the no-secrets requirement.
✗
Basic authentication with a storage account name and password, because Azure Storage supports that model directly.
Why it's wrong here
Azure Storage does not use basic username and password authentication for blob access.
✗
Anonymous public access, because it lets the VM read blobs without any authentication at all.
Why it's wrong here
Anonymous access is only suitable for public content and is not a secure identity-based approach.

Common exam traps

Common exam trap: answer the scenario, not the keyword

The trap here is that candidates often confuse managed identities with shared access signatures (SAS) or shared keys, thinking that any identity-based method requires storing a secret, or they incorrectly assume that anonymous access is a valid identity type for application authentication.

Detailed technical explanation

How to think about this question

Under the hood, managed identities leverage the Azure Instance Metadata Service (IMDS) endpoint at 169.254.169.254 to acquire an access token. The VM's managed identity is registered as a service principal in Azure AD, and the token is obtained using OAuth 2.0 client credentials grant flow. In a real-world scenario, this is critical for applications that need to access storage from VMs in a secure, keyless manner, such as a web server reading configuration blobs without embedding secrets in code or configuration files.

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.

What to study next

Got this wrong? Here's your next step.

Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.

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FAQ

Questions learners often ask

What does this AZ-104 question test?

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, because it is tied to one VM and can request tokens without stored secrets. — System-assigned managed identity is correct because it is directly tied to a single VM and can request tokens from Azure AD without storing any secrets or keys. The VM uses its managed identity to authenticate to Azure Storage by obtaining an OAuth 2.0 token, which is then passed to the storage service via the Authorization header. This eliminates the need for any stored credentials, meeting the requirement of not storing keys or passwords.

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.

About these practice questions

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Same concept, more angles

1 more ways this is tested on AZ-104

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. A VM-hosted application must read blobs from an Azure Storage account without storing any secret in code or configuration. Which identity should you enable on the VM?

easy

A.A storage account access key
✓ B.A system-assigned managed identity
C.A shared access signature (SAS) token
D.A local administrator account on the VM

Why B: A system-assigned managed identity (B) is the correct choice because it allows the VM to authenticate to Azure Storage without storing any credentials in code or configuration. Azure automatically manages the identity's lifecycle and provides a token that the VM can use to access the storage account via Azure AD authentication, eliminating the need for secrets.

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Question Discussion

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