- A
A system-assigned managed identity on each VM.
Why wrong: System-assigned managed identities are tied to an individual VM resource. They disappear when that VM is deleted and cannot be directly reused by future VMs, which makes them a poor fit for shared identity reuse.
- B
A storage account shared key embedded in the application settings.
Why wrong: A shared key provides access, but it is a secret that must be stored, protected, and rotated. It does not meet the requirement to avoid credentials and does not provide a reusable Azure identity.
- C
A service principal credential stored in a Key Vault secret.
Why wrong: A service principal can authenticate, but it still relies on a secret or certificate that must be managed. The requirement specifically asks for an identity that can be reused across VMs without creating another credential.
- D
A user-assigned managed identity attached to the VMs.
A user-assigned managed identity is the right choice when the same Azure identity must be shared across multiple VMs and survive VM replacement. You can grant it access once, attach it to current and future VMs, and avoid storing passwords or access keys in the workload.
Quick Answer
The answer is a user-assigned managed identity attached to the VMs. This approach works because a user-assigned managed identity is a standalone Azure resource, independent of any single VM, so you can create it once and assign it to multiple VMs across different resource groups. If a VM is rebuilt or replaced, you simply reassign the same identity to the new VM—no credential rotation or secret management is needed, ensuring continuous blob access via Azure AD authentication. On the AZ-104 exam, this scenario tests your understanding of managed identity types, with the common trap being to choose a system-assigned identity, which is tied to a single VM and cannot be reused. Remember the key difference: system-assigned is “born with the VM and dies with it,” while user-assigned is a “reusable badge” you can pin to any VM. Memory tip: think “User = Universal” for multiple VMs.
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.
Three Azure VMs in separate resource groups run the same data-processing agent. The agent must read blobs from a storage account, and the access must continue to work if any VM is rebuilt or replaced. The operations team also wants one identity they can reassign to future VMs without creating another credential. Which identity approach should be used?
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
A user-assigned managed identity attached to the VMs.
A user-assigned managed identity (D) is the correct choice because it is a standalone Azure resource that can be created independently and then attached to multiple VMs. If a VM is rebuilt or replaced, the same user-assigned identity can be reassigned to the new VM without any credential rotation or secret management. This ensures continuous blob access via Azure AD authentication, meeting the requirement for a single, reusable identity.
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.
- ✗
A system-assigned managed identity on each VM.
Why it's wrong here
System-assigned managed identities are tied to an individual VM resource. They disappear when that VM is deleted and cannot be directly reused by future VMs, which makes them a poor fit for shared identity reuse.
- ✗
A storage account shared key embedded in the application settings.
Why it's wrong here
A shared key provides access, but it is a secret that must be stored, protected, and rotated. It does not meet the requirement to avoid credentials and does not provide a reusable Azure identity.
- ✗
A service principal credential stored in a Key Vault secret.
Why it's wrong here
A service principal can authenticate, but it still relies on a secret or certificate that must be managed. The requirement specifically asks for an identity that can be reused across VMs without creating another credential.
- ✓
A user-assigned managed identity attached to the VMs.
Why this is correct
A user-assigned managed identity is the right choice when the same Azure identity must be shared across multiple VMs and survive VM replacement. You can grant it access once, attach it to current and future VMs, and avoid storing passwords or access keys in the workload.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates confuse system-assigned and user-assigned managed identities, assuming both are equally reusable, but system-assigned identities are deleted with the VM, making them unsuitable for scenarios requiring identity persistence across VM rebuilds.
Detailed technical explanation
How to think about this question
A user-assigned managed identity is represented as a service principal in Azure AD, and when attached to a VM, the Azure Instance Metadata Service (IMDS) endpoint provides tokens for that identity. The VM's agent automatically rotates tokens, and the identity's role assignment (e.g., 'Storage Blob Data Reader') persists independently of the VM's lifecycle. This decoupling allows the same identity to be attached to any number of VMs, even across resource groups, and survives VM deletion and recreation.
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.
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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: A user-assigned managed identity attached to the VMs. — A user-assigned managed identity (D) is the correct choice because it is a standalone Azure resource that can be created independently and then attached to multiple VMs. If a VM is rebuilt or replaced, the same user-assigned identity can be reassigned to the new VM without any credential rotation or secret management. This ensures continuous blob access via Azure AD authentication, meeting the requirement for a single, reusable identity.
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 →
Same concept, more angles
3 more ways this is tested on AZ-104
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. Three Azure virtual machines in different resource groups must all use the same Azure identity to access a storage account. The identity should keep working even if one VM is rebuilt. What should you use?
easy- A.A system-assigned managed identity on each VM
- ✓ B.A user-assigned managed identity
- C.A shared VM administrator password
- D.A storage account SAS token
Why B: A user-assigned managed identity is created as a standalone Azure resource and can be assigned to multiple VMs, even across resource groups. It persists independently of any VM lifecycle, so rebuilding a VM does not affect the identity's availability or its permissions to access the storage account.
Variation 2. A scheduled script runs on several Azure virtual machines that are created and replaced over time. The script must use the same Azure identity on every VM, and the identity should continue to exist even if one VM is deleted and recreated. What should the administrator use?
medium- A.A system-assigned managed identity on each VM.
- ✓ B.A user-assigned managed identity attached to the VMs.
- C.A service principal with a client secret stored in each VM.
- D.A shared access signature stored in the VM registry.
Why B: A user-assigned managed identity is the correct choice because it is an Azure resource that exists independently of any VM, and it can be attached to multiple VMs. When a VM is deleted and recreated, the same user-assigned managed identity can be reattached, ensuring the script uses the same identity consistently. This decouples the identity lifecycle from the VM lifecycle, meeting the requirement for persistence across VM replacements.
Variation 3. A scheduled script runs on several Azure VMs. The VMs are rebuilt often, and the script must always use the same Azure identity across every rebuild without storing secrets on disk. Which two steps should the administrator take? Select two.
hard- ✓ A.Create a user-assigned managed identity.
- ✓ B.Assign that user-assigned identity to each VM that runs the script.
- C.Use a system-assigned managed identity on one VM and clone it.
- D.Store a service principal secret in the script configuration.
- E.Use a shared access signature to authenticate to Azure Resource Manager.
Why A: A user-assigned managed identity is the correct choice because it is an Azure identity that exists independently of any VM and can be assigned to multiple VMs. When a VM is rebuilt, you simply assign the same user-assigned identity to the new VM, and the script can authenticate using the identity's client ID without storing any secrets on disk. This ensures the script always uses the same identity across rebuilds, as the identity's credentials are managed entirely by Azure and rotated automatically.
Last reviewed: Jun 11, 2026
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