- A
User-assigned managed identity
Why wrong: A user-assigned managed identity can be shared, but it does not automatically disappear when a single VM is deleted.
- B
System-assigned managed identity
A system-assigned managed identity is tied directly to one VM. Azure creates and manages the identity for that resource, so no passwords or client secrets need to be stored on the server. When the VM is deleted, the identity is removed automatically, which satisfies both security and lifecycle requirements.
- C
A service principal with a stored client secret
Why wrong: A service principal requires a secret or certificate, which creates the credential storage problem the requirement explicitly forbids.
- D
A storage account access key
Why wrong: A storage account key is unrelated to Key Vault authentication and would not provide the requested identity-based access pattern.
Quick Answer
The answer is to enable a system-assigned managed identity. This is correct because a system-assigned managed identity is tied directly to the lifecycle of the Azure VM—when the VM is created, the identity is automatically provisioned in Azure AD, and when the VM is deleted, that identity is automatically removed, ensuring no orphaned credentials remain. For the AZ-104 exam, this scenario tests your understanding of managed identity types and their lifecycle behavior; a common trap is confusing system-assigned with user-assigned identities, which persist independently after the VM is deleted. When granting access to Key Vault secrets, the system-assigned identity allows the VM to authenticate without storing any credentials locally, satisfying the requirement for a credential-free solution. Remember the memory tip: “System follows the VM—born with it, gone with it.”
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 newly created VM must read secrets from Azure Key Vault. The solution must not store credentials on the VM, and the identity should disappear automatically when the VM is deleted. What should the administrator enable?
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
A system-assigned managed identity is automatically created and tied to the lifecycle of the Azure VM. When the VM is deleted, the identity is automatically removed, satisfying the requirement that the identity disappears. This identity can be granted access to Key Vault secrets via Azure RBAC or access policies, without storing any credentials 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.
- ✗
User-assigned managed identity
Why it's wrong here
A user-assigned managed identity can be shared, but it does not automatically disappear when a single VM is deleted.
- ✓
System-assigned managed identity
Why this is correct
A system-assigned managed identity is tied directly to one VM. Azure creates and manages the identity for that resource, so no passwords or client secrets need to be stored on the server. When the VM is deleted, the identity is removed automatically, which satisfies both security and lifecycle requirements.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
A service principal with a stored client secret
Why it's wrong here
A service principal requires a secret or certificate, which creates the credential storage problem the requirement explicitly forbids.
- ✗
A storage account access key
Why it's wrong here
A storage account key is unrelated to Key Vault authentication and would not provide the requested identity-based access pattern.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse user-assigned and system-assigned managed identities, assuming both are tied to the VM lifecycle, but only the system-assigned identity is automatically deleted with the VM.
Detailed technical explanation
How to think about this question
Under the hood, a system-assigned managed identity uses Azure Instance Metadata Service (IMDS) to obtain an access token for Azure AD. The VM requests a token from the IMDS endpoint (169.254.169.254) using the managed identity's object ID, and that token is then used to authenticate to Key Vault. A subtle behavior: the identity is tied to the VM's resource ID, so if the VM is stopped (deallocated) but not deleted, the identity remains; it is only removed upon deletion of the VM resource.
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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Manage Azure Identities and Governance — study guide chapter
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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 — A system-assigned managed identity is automatically created and tied to the lifecycle of the Azure VM. When the VM is deleted, the identity is automatically removed, satisfying the requirement that the identity disappears. This identity can be granted access to Key Vault secrets via Azure RBAC or access policies, without storing any credentials 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.
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 →
Last reviewed: Jun 11, 2026
This AZ-104 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the AZ-104 exam.
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