AZ-104 Manage Azure Identities and Governance Practice Question
This AZ-104 practice question tests your understanding of manage azure identities and governance. The scenario asks you to isolate a root cause — eliminate options that address a different problem before choosing. 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.
An Azure CLI script runs on a utility VM every night to create and tag resources in another subscription. The script cannot store a password or client secret, and the VM is regularly redeployed from a standard image. What is the best identity design?
Clue words in this question
Noticing these words before you look at the options changes how you read each choice.
Clue: "best"
Why it matters: Signals that multiple options may be partially correct. Choose the option that most directly solves the exact problem described, not the one that sounds most complete.
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Create a user-assigned managed identity and attach it to the utility VM
Option B is correct because a user-assigned managed identity can be created once, assigned to the utility VM, and used across redeployments without storing any credentials. The script can authenticate via Azure CLI using the managed identity's client ID, and the identity persists independently of the VM's lifecycle, satisfying the requirement of no password or client secret storage.
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.
✗
Assign a system-assigned managed identity to the utility VM
Why it's wrong here
A system-assigned identity is removed if the VM is deleted and cannot be shared elsewhere.
✓
Create a user-assigned managed identity and attach it to the utility VM
Why this is correct
A user-assigned identity persists independently of the VM and can be reused after redeployment.
Clue confirmation
The clue word "best" in the question point toward this answer.
Related concept
Read the scenario before looking for a memorised answer.
✗
Create a service principal and store its secret in the VM configuration
Why it's wrong here
A stored secret violates the requirement to avoid passwords and client credentials on the VM.
✗
Use a shared access signature to sign the Azure CLI session
Why it's wrong here
SAS tokens are for specific storage operations, not general Azure resource deployment authorization.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often choose system-assigned managed identity (Option A) without realizing that redeploying the VM from a standard image destroys the identity, breaking any cross-subscription role assignments that were configured for the original identity.
Detailed technical explanation
How to think about this question
User-assigned managed identities are Azure AD identities that exist independently of any VM; they can be assigned to multiple resources and survive VM redeployments. The Azure CLI uses the `az login --identity --username <client-id>` command to authenticate with the managed identity, which obtains an access token from the Azure Instance Metadata Service (IMDS) endpoint at 169.254.169.254. This design is ideal for automation scenarios where the compute resource is ephemeral but the identity and its role assignments must persist.
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: Create a user-assigned managed identity and attach it to the utility VM — Option B is correct because a user-assigned managed identity can be created once, assigned to the utility VM, and used across redeployments without storing any credentials. The script can authenticate via Azure CLI using the managed identity's client ID, and the identity persists independently of the VM's lifecycle, satisfying the requirement of no password or client secret storage.
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.
Are there clue words in this question I should notice?
Yes — watch for: "best". Signals that multiple options may be partially correct. Choose the option that most directly solves the exact problem described, not the one that sounds most complete.
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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