- 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.
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.
When this WOULD be correct
A system-assigned managed identity would be correct if each VM needs its own unique identity (e.g., for individual auditing) and the VMs are never rebuilt or replaced, or if the role assignment is recreated automatically via infrastructure-as-code.
- ✗
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.
When this WOULD be correct
This option would be correct if the question required a simple, low-cost solution for a single VM that does not need identity reassignment, and security requirements are minimal (e.g., a development or test environment).
- ✗
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.
When this WOULD be correct
This option would be correct if the question required the identity to be used by applications running outside Azure (e.g., on-premises) or if the VMs were in a different tenant, where managed identities are not supported. It would also be correct if the scenario explicitly required storing the credential in a secure vault for auditing or rotation purposes.
- ✓
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.
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.
✓A user-assigned managed identity attached to the VMs.Correct answer▾
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.
✗A system-assigned managed identity on each VM.Wrong answer — click to see why▾
Why this is wrong here
A system-assigned managed identity is tied to the lifecycle of a single VM; if the VM is rebuilt, the identity is deleted and recreated, breaking the RBAC role assignment on the storage account. The question requires the identity to persist across VM rebuilds.
★ When this WOULD be the correct answer
A system-assigned managed identity would be correct if each VM needs its own unique identity (e.g., for individual auditing) and the VMs are never rebuilt or replaced, or if the role assignment is recreated automatically via infrastructure-as-code.
Why candidates choose this
Candidates may think managed identities are always the best practice for Azure resources, and system-assigned seems simpler to enable without extra setup, overlooking the lifecycle dependency.
✗A storage account shared key embedded in the application settings.Wrong answer — click to see why▾
Why this is wrong here
A storage account shared key embedded in application settings is not secure and does not support identity reassignment; if a VM is rebuilt, the key must be re-deployed, and it cannot be easily reassigned to future VMs without creating a new credential.
★ When this WOULD be the correct answer
This option would be correct if the question required a simple, low-cost solution for a single VM that does not need identity reassignment, and security requirements are minimal (e.g., a development or test environment).
Why candidates choose this
Candidates may think embedding a shared key in application settings is straightforward and avoids the complexity of managed identities, overlooking security and manageability requirements.
✗A service principal credential stored in a Key Vault secret.Wrong answer — click to see why▾
Why this is wrong here
A service principal credential stored in Key Vault requires managing a secret and rotating it, and if the VM is rebuilt, the application must retrieve the secret again, which adds complexity and a dependency on Key Vault availability. The question requires a single identity that can be reassigned to future VMs without creating another credential, which user-assigned managed identity fulfills more directly.
★ When this WOULD be the correct answer
This option would be correct if the question required the identity to be used by applications running outside Azure (e.g., on-premises) or if the VMs were in a different tenant, where managed identities are not supported. It would also be correct if the scenario explicitly required storing the credential in a secure vault for auditing or rotation purposes.
Why candidates choose this
Candidates may think Key Vault is the best practice for storing secrets and that a service principal is the standard way to grant access to Azure resources, overlooking that managed identities eliminate the need to manage credentials entirely.
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 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
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Last reviewed: Jun 11, 2026
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