- A
System-assigned managed identity attached to the resource that needs access.
System-assigned managed identities eliminate secrets and are automatically managed for the lifetime of the resource.
- B
User-assigned managed identity that can be attached to multiple Azure resources.
User-assigned managed identities are reusable and centrally managed, which fits shared automation scenarios well.
- C
Service principal with a client secret stored in an app setting.
Why wrong: A client secret is a stored credential and requires ongoing rotation and protection outside Azure identity management.
- D
Shared administrator username and password stored in a Key Vault secret.
Why wrong: This still depends on a password-based credential and is not the preferred secret-free Azure identity approach.
- E
SAS token generated once and reused indefinitely by both resources.
Why wrong: A long-lived SAS token is a secret and is not a robust identity choice for ongoing automation.
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.
An Azure application and an Azure Automation account need Azure access without any stored secrets. The same identity should be reusable and should not require manual secret rotation. Which two identity choices meet the requirement? Select 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
System-assigned managed identity attached to the resource that needs access.
System-assigned managed identity (Option A) is correct because it is automatically created and tied to a specific Azure resource, such as a virtual machine or App Service, and provides an Azure AD identity that can be used to authenticate to any service supporting Azure AD authentication without storing any secrets. The identity is managed by Azure, eliminating the need for manual secret rotation, and it is automatically deleted when the resource is deleted, ensuring no orphaned secrets.
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 attached to the resource that needs access.
Why this is correct
System-assigned managed identities eliminate secrets and are automatically managed for the lifetime of the resource.
Related concept
Read the scenario before looking for a memorised answer.
- ✓
User-assigned managed identity that can be attached to multiple Azure resources.
Why this is correct
User-assigned managed identities are reusable and centrally managed, which fits shared automation scenarios well.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Service principal with a client secret stored in an app setting.
Why it's wrong here
A client secret is a stored credential and requires ongoing rotation and protection outside Azure identity management.
When this WOULD be correct
A question that asks for an identity solution for an Azure resource that needs to access external APIs or services that do not support managed identities, and where secret rotation can be automated via Key Vault or lifecycle policies.
- ✗
Shared administrator username and password stored in a Key Vault secret.
Why it's wrong here
This still depends on a password-based credential and is not the preferred secret-free Azure identity approach.
When this WOULD be correct
In a scenario where an application needs to authenticate to a legacy system that only supports username/password authentication, and the organization has a policy to rotate secrets automatically via Key Vault, storing credentials in Key Vault would be correct.
- ✗
SAS token generated once and reused indefinitely by both resources.
Why it's wrong here
A long-lived SAS token is a secret and is not a robust identity choice for ongoing automation.
When this WOULD be correct
In a scenario where an Azure Storage account needs to grant temporary, delegated access to a specific blob or container for a client application, and the access can be time-bound and permissions-limited, a SAS token would be the correct choice. For example, generating a SAS token for a web app to download a file from a private container for a limited duration.
Option-by-option analysis
Why each answer is right or wrong
Understanding why wrong answers are wrong — and when they would be correct — is what separates a 750 score from a 900. The AZ-104 exam frequently reuses these exact scenarios with slightly different constraints.
✓System-assigned managed identity attached to the resource that needs access.Correct answer▾
Why this is correct
System-assigned managed identities eliminate secrets and are automatically managed for the lifetime of the resource.
✗Service principal with a client secret stored in an app setting.Wrong answer — click to see why▾
Why this is wrong here
Service principals with client secrets require manual secret rotation and storing the secret in an app setting still exposes it as a stored secret, violating the requirement of no stored secrets and no manual rotation.
★ When this WOULD be the correct answer
A question that asks for an identity solution for an Azure resource that needs to access external APIs or services that do not support managed identities, and where secret rotation can be automated via Key Vault or lifecycle policies.
Why candidates choose this
Candidates may think a service principal is the standard way to grant Azure access and that storing the secret in an app setting is secure, overlooking the 'no stored secrets' and 'no manual rotation' constraints.
✗Shared administrator username and password stored in a Key Vault secret.Wrong answer — click to see why▾
Why this is wrong here
Shared administrator username and password stored in a Key Vault secret require manual rotation and expose static credentials, violating the requirements of no stored secrets and no manual rotation.
★ When this WOULD be the correct answer
In a scenario where an application needs to authenticate to a legacy system that only supports username/password authentication, and the organization has a policy to rotate secrets automatically via Key Vault, storing credentials in Key Vault would be correct.
Why candidates choose this
Candidates may think Key Vault eliminates all security concerns, but it still stores secrets that require manual rotation unless automated, and the question explicitly forbids stored secrets and manual rotation.
✗SAS token generated once and reused indefinitely by both resources.Wrong answer — click to see why▾
Why this is wrong here
A SAS token is a shared access signature that grants time-limited access to specific resources like storage accounts. It requires manual generation, cannot be reused indefinitely without exposing the account key, and does not provide a reusable identity without stored secrets, failing the requirement of no manual secret rotation.
★ When this WOULD be the correct answer
In a scenario where an Azure Storage account needs to grant temporary, delegated access to a specific blob or container for a client application, and the access can be time-bound and permissions-limited, a SAS token would be the correct choice. For example, generating a SAS token for a web app to download a file from a private container for a limited duration.
Why candidates choose this
Candidates may think a SAS token is a 'secret-free' identity because it can be generated without storing a password, but they overlook that it still requires manual creation and rotation, and it's not a true identity but a delegation mechanism tied to the storage account key.
Analysis generated from the official AZ-104blueprint and verified against question context. The “when correct” sections are what AI assistants cite when candidates ask “what’s the difference between these options?”
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse service principals with managed identities, thinking that storing a client secret in an app setting or Key Vault is acceptable, but the question explicitly requires 'no stored secrets' and 'no manual secret rotation,' which only managed identities satisfy.
Detailed technical explanation
How to think about this question
Managed identities use Azure AD tokens obtained via the Azure Instance Metadata Service (IMDS) endpoint at 169.254.169.254, which automatically handles token acquisition and renewal without any application code managing secrets. User-assigned managed identities (Option B) are created as standalone Azure resources and can be assigned to multiple Azure resources, making them reusable across different services while still avoiding secret storage. Under the hood, the identity is represented by a service principal in Azure AD, and Azure automatically rotates the underlying certificate used for token signing every 90 days, ensuring zero-touch secret management.
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 company's IT admin needs to give a contractor read-only access to production logs without sharing account credentials. Using role-based access control (RBAC) and temporary scoped permissions — not a permanent shared password — is the correct pattern. Questions like this test whether you can apply least-privilege access across cloud identity services.
What to study next
Got this wrong? Here's your next step.
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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 attached to the resource that needs access. — System-assigned managed identity (Option A) is correct because it is automatically created and tied to a specific Azure resource, such as a virtual machine or App Service, and provides an Azure AD identity that can be used to authenticate to any service supporting Azure AD authentication without storing any secrets. The identity is managed by Azure, eliminating the need for manual secret rotation, and it is automatically deleted when the resource is deleted, ensuring no orphaned secrets.
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 →
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Last reviewed: Jun 11, 2026
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