The answer is to use a user-assigned managed identity and attach it to all three VMs. This is correct because a user-assigned managed identity is a standalone Azure resource that can be shared across multiple virtual machines, allowing them to reuse the same Azure access without sharing secrets. Instead of embedding credentials, each VM obtains tokens from Azure AD via the Instance Metadata Service (IMDS) endpoint, so no secrets are ever stored or rotated. On the AZ-104 exam, this scenario tests your understanding of identity management versus system-assigned identities, which are tied to a single resource and cannot be reused. A common trap is to choose a service principal or system-assigned identity, but those either require secret management or lack multi-VM support. Memory tip: think “user-assigned = reusable across VMs, system-assigned = one per VM.”
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.
Exhibit
Deployment note:
- vm-app1 is in rg-web
- vm-app2 is in rg-api
- vm-app3 is in rg-batch
- All three VMs must read from the same storage account
- The identity must keep working if one VM is reimaged or replaced
- Access should be granted once and then reused by all three VMs
Based on the exhibit, which identity approach should be used so all three virtual machines can reuse the same Azure access without sharing secrets?
Deployment note:
- vm-app1 is in rg-web
- vm-app2 is in rg-api
- vm-app3 is in rg-batch
- All three VMs must read from the same storage account
- The identity must keep working if one VM is reimaged or replaced
- Access should be granted once and then reused by all three VMs
A
Assign a system-assigned managed identity to each VM.
Why wrong: A system-assigned identity is bound to one VM, so it cannot be shared cleanly across multiple machines.
B
Use a user-assigned managed identity and attach it to all three VMs.
A user-assigned managed identity is the right fit when multiple resources need the same Azure identity. It is created as a standalone resource and can be attached to all three VMs, so the access model remains consistent even if a VM is reimaged or replaced. This also avoids storing storage keys, passwords, or connection strings in the application or operating system.
C
Create a storage account access key and place it in each VM's application settings.
Why wrong: Sharing storage keys increases risk and does not satisfy the requirement to avoid secrets.
D
Create a separate SAS token for each VM and rotate it manually.
Why wrong: SAS tokens are limited-time secrets and do not provide the shared, identity-based access pattern requested.
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Use a user-assigned managed identity and attach it to all three VMs.
A user-assigned managed identity is a standalone Azure resource that can be assigned to multiple Azure VMs, allowing all three VMs to authenticate to Azure services (e.g., Azure Storage, Key Vault) using the same identity without sharing any secrets. This approach eliminates the need to manage or rotate credentials, as the identity is managed entirely by Azure AD and tokens are obtained via the Azure Instance Metadata Service (IMDS) endpoint.
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 each VM.
Why it's wrong here
A system-assigned identity is bound to one VM, so it cannot be shared cleanly across multiple machines.
✓
Use a user-assigned managed identity and attach it to all three VMs.
Why this is correct
A user-assigned managed identity is the right fit when multiple resources need the same Azure identity. It is created as a standalone resource and can be attached to all three VMs, so the access model remains consistent even if a VM is reimaged or replaced. This also avoids storing storage keys, passwords, or connection strings in the application or operating system.
Related concept
Read the scenario before looking for a memorised answer.
✗
Create a storage account access key and place it in each VM's application settings.
Why it's wrong here
Sharing storage keys increases risk and does not satisfy the requirement to avoid secrets.
✗
Create a separate SAS token for each VM and rotate it manually.
Why it's wrong here
SAS tokens are limited-time secrets and do not provide the shared, identity-based access pattern requested.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse system-assigned and user-assigned managed identities, incorrectly assuming that system-assigned identities can be shared across multiple VMs, when in fact only user-assigned identities support multi-VM assignment.
Detailed technical explanation
How to think about this question
Under the hood, a user-assigned managed identity is represented as a service principal in Azure AD, and when assigned to a VM, Azure automatically provisions the identity's certificate on the VM. The VM can then request an access token from the IMDS endpoint (169.254.169.254) using the identity's client ID, which is valid for Azure RBAC-authenticated resources. This design supports scenarios like a fleet of web servers that need to access the same Azure SQL Database or Key Vault without embedding credentials in code or configuration.
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: Use a user-assigned managed identity and attach it to all three VMs. — A user-assigned managed identity is a standalone Azure resource that can be assigned to multiple Azure VMs, allowing all three VMs to authenticate to Azure services (e.g., Azure Storage, Key Vault) using the same identity without sharing any secrets. This approach eliminates the need to manage or rotate credentials, as the identity is managed entirely by Azure AD and tokens are obtained via the Azure Instance Metadata Service (IMDS) endpoint.
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
Courseiva creates original exam-style practice questions with explanations and wrong-answer analysis. It does not publish real exam questions, exam dumps, or protected exam content. Learn why practice questions differ from exam dumps →
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 system-assigned managed identity is attached to an Azure VM to call Key Vault. The VM is frequently reimaged and sometimes redeployed to a different name during scale events, but the application must keep the same identity and secretless access. What should the administrator use instead?
hard
A.A system-assigned managed identity on each newly deployed VM.
✓ B.A user-assigned managed identity associated with the workload.
C.A shared storage account key placed in the VM custom script.
D.A policy exemption for the Key Vault access policy.
Why B: A user-assigned managed identity is decoupled from the VM lifecycle, so it persists independently when VMs are reimaged or redeployed with different names. This allows the application to retain the same identity and secretless access to Key Vault without requiring manual reconfiguration or credential rotation.
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Question Discussion
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