The answer is the system-assigned managed identity. This is the correct choice because its lifecycle is directly tied to the Azure VM—when the VM is deleted, the identity is automatically removed, eliminating any orphaned credentials. It enables the automation tool to authenticate to Azure Resource Manager APIs without storing a password, certificate, or client secret on the VM, instead using Azure AD tokens obtained through the Azure Instance Metadata Service (IMDS) endpoint. On the AZ-104 exam, this question tests your understanding of managed identity types and their lifecycle dependencies, often appearing as a scenario where you must choose between system-assigned and user-assigned identities. A common trap is selecting a user-assigned identity, which persists independently of the VM and must be manually cleaned up. Remember the memory tip: “System is synced to the VM’s lifespan; user is yours to manage.”
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 automation tool must call Azure Resource Manager APIs, but the team will not store a password, certificate, or client secret on the VM. The identity should also disappear automatically when the VM is deleted. Which identity should be assigned?
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 the correct choice because it is tied directly to the lifecycle of the Azure VM—when the VM is deleted, the identity is automatically removed. It allows the automation tool to authenticate to Azure Resource Manager APIs without storing any credentials (password, certificate, or client secret) on the VM, using Azure AD tokens 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.
✓
System-assigned managed identity
Why this is correct
A system-assigned managed identity is tied to one VM and is removed automatically when the VM is deleted.
Related concept
Read the scenario before looking for a memorised answer.
✗
User-assigned managed identity
Why it's wrong here
A user-assigned identity can be shared and reused, which means it does not disappear with one VM.
✗
Service principal with a client secret
Why it's wrong here
A service principal requires credential management, which the requirement specifically says to avoid.
✗
Shared access signature
Why it's wrong here
A SAS token is for scoped storage access, not for general Azure Resource Manager authentication.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse user-assigned managed identities with system-assigned ones, failing to recognize that user-assigned identities are independent resources that do not automatically disappear when the VM is deleted.
Detailed technical explanation
How to think about this question
Under the hood, a system-assigned managed identity creates a service principal in Azure AD automatically when the VM is provisioned. The automation tool can request an access token from the IMDS endpoint (169.254.169.254) using the Azure REST API, which returns a token valid for Azure Resource Manager without any secrets stored locally. This token is automatically rotated by Azure, and the identity is tied to the VM's resource ID, ensuring it is deleted when the VM is removed.
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.
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: System-assigned managed identity — A system-assigned managed identity is the correct choice because it is tied directly to the lifecycle of the Azure VM—when the VM is deleted, the identity is automatically removed. It allows the automation tool to authenticate to Azure Resource Manager APIs without storing any credentials (password, certificate, or client secret) on the VM, using Azure AD tokens 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 →
Share a tip, memory trick, or ask about the reasoning behind this question. Do not post real exam questions, leaked content, braindumps, or copyrighted exam material. Comments are moderated and may be removed without notice.
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.
Question Discussion
Share a tip, memory trick, or ask about the reasoning behind this question. Do not post real exam questions, leaked content, braindumps, or copyrighted exam material. Comments are moderated and may be removed without notice.
Sign in to join the discussion.