- A
Assign a user-assigned managed identity and attach it to each VM.
A user-assigned managed identity can be reused across multiple VMs and survives VM rebuilds because it is a separate Azure resource. That makes it ideal when the same identity must work for several machines over time.
- B
Store the storage account access key in a script variable.
Why wrong: Embedding an access key in a script variable still leaves a secret inside automation content. That violates the security requirement and creates a high-risk credential-management problem.
- C
Use a Custom Script Extension to run the bootstrap commands at provisioning.
A Custom Script Extension is an appropriate way to run first-boot installation steps without putting secrets directly in the image or template. It lets Azure execute the bootstrap logic on the VM during provisioning.
- D
Create a separate local administrator account for the script to use.
Why wrong: A local administrator account does not solve secret storage, and it does not provide a reusable Azure authentication mechanism for Blob Storage. It also increases operational overhead and credential exposure.
- E
Embed a SAS token directly in the Bicep parameters file.
Why wrong: A SAS token is still a secret, and placing it in a parameters file exposes it to anyone who can read the deployment artifact. That conflicts with the requirement to avoid secrets in templates and scripts.
User-Assigned Managed Identity for VM Bootstrap
This AZ-104 practice question tests your understanding of manage azure identities and governance. This is a configuration task: choose the command set that satisfies every stated requirement. Small differences — like 'secret' vs 'password' or 'transport input ssh' vs 'all' — change whether the answer is correct. 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 bootstrap script must install software on three VMs, then download configuration files from Blob Storage. Security forbids secrets in templates or scripts, and the same authentication method must work after the VMs are rebuilt. Which two choices should you make? 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
Assign a user-assigned managed identity and attach it to each VM.
Option A is correct because a user-assigned managed identity provides a secure, credential-free authentication method that persists across VM rebuilds. Unlike system-assigned managed identities, which are tied to a specific VM lifecycle and are lost when the VM is deleted, a user-assigned identity is a standalone Azure resource that can be reassigned to new VMs. This allows the bootstrap script to authenticate to Azure Blob Storage via Azure AD without storing any secrets, satisfying the security constraint.
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.
- ✓
Assign a user-assigned managed identity and attach it to each VM.
Why this is correct
A user-assigned managed identity can be reused across multiple VMs and survives VM rebuilds because it is a separate Azure resource. That makes it ideal when the same identity must work for several machines over time.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Store the storage account access key in a script variable.
Why it's wrong here
Embedding an access key in a script variable still leaves a secret inside automation content. That violates the security requirement and creates a high-risk credential-management problem.
When this WOULD be correct
If the question had no security constraints against secrets in scripts and required a simple, low-cost solution for a one-time deployment where the script runs only once and the VMs are not rebuilt, storing the access key in a script variable could be acceptable.
- ✓
Use a Custom Script Extension to run the bootstrap commands at provisioning.
Why this is correct
A Custom Script Extension is an appropriate way to run first-boot installation steps without putting secrets directly in the image or template. It lets Azure execute the bootstrap logic on the VM during provisioning.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Create a separate local administrator account for the script to use.
Why it's wrong here
A local administrator account does not solve secret storage, and it does not provide a reusable Azure authentication mechanism for Blob Storage. It also increases operational overhead and credential exposure.
When this WOULD be correct
In a scenario where VMs are not rebuilt and secrets can be securely stored (e.g., using Azure Key Vault with a VM extension to retrieve credentials at runtime), a local administrator account could be used for script execution. The question would need to allow secrets in scripts and not require persistence across rebuilds.
- ✗
Embed a SAS token directly in the Bicep parameters file.
Why it's wrong here
A SAS token is still a secret, and placing it in a parameters file exposes it to anyone who can read the deployment artifact. That conflicts with the requirement to avoid secrets in templates and scripts.
When this WOULD be correct
In a scenario where the requirement is to grant time-limited access to a storage account without managing identities, and secrets are allowed in parameters files (e.g., a non-production environment with strict access controls).
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.
✓Assign a user-assigned managed identity and attach it to each VM.Correct answer▾
Why this is correct
A user-assigned managed identity can be reused across multiple VMs and survives VM rebuilds because it is a separate Azure resource. That makes it ideal when the same identity must work for several machines over time.
✗Store the storage account access key in a script variable.Wrong answer — click to see why▾
Why this is wrong here
Storing the storage account access key in a script variable violates the security requirement that forbids secrets in templates or scripts. Access keys are static secrets that would be exposed in the script, and they do not support the same authentication method after VMs are rebuilt without manual key rotation.
★ When this WOULD be the correct answer
If the question had no security constraints against secrets in scripts and required a simple, low-cost solution for a one-time deployment where the script runs only once and the VMs are not rebuilt, storing the access key in a script variable could be acceptable.
Why candidates choose this
Candidates may think storing the key in a variable is secure because it is not hardcoded in the template, but it still appears in the script execution context and violates the 'no secrets in scripts' rule.
✗Create a separate local administrator account for the script to use.Wrong answer — click to see why▾
Why this is wrong here
Creating a separate local administrator account violates the security constraint forbidding secrets in scripts or templates, as the account credentials would need to be stored or passed insecurely. It also does not provide a consistent authentication method that works after VMs are rebuilt, since local accounts are tied to each VM instance.
★ When this WOULD be the correct answer
In a scenario where VMs are not rebuilt and secrets can be securely stored (e.g., using Azure Key Vault with a VM extension to retrieve credentials at runtime), a local administrator account could be used for script execution. The question would need to allow secrets in scripts and not require persistence across rebuilds.
Why candidates choose this
Candidates may think a dedicated local account is a secure way to run scripts without using managed identities, overlooking the fact that credentials must still be stored somewhere, which violates the 'no secrets in templates or scripts' rule.
✗Embed a SAS token directly in the Bicep parameters file.Wrong answer — click to see why▾
Why this is wrong here
Embedding a SAS token in the Bicep parameters file violates the security requirement forbidding secrets in templates or scripts, as the parameters file is part of the deployment template.
★ When this WOULD be the correct answer
In a scenario where the requirement is to grant time-limited access to a storage account without managing identities, and secrets are allowed in parameters files (e.g., a non-production environment with strict access controls).
Why candidates choose this
Candidates may think SAS tokens are secure because they are time-limited and scoped, overlooking that embedding them in a template file still exposes the secret in the deployment artifact.
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 system-assigned managed identities (which are tied to the VM lifecycle and lost on deletion) with user-assigned managed identities (which persist independently), leading them to incorrectly assume that managed identities cannot survive a VM rebuild.
Detailed technical explanation
How to think about this question
User-assigned managed identities use Azure AD tokens obtained via the Azure Instance Metadata Service (IMDS) endpoint at 169.254.169.254. The VM requests a token for the managed identity’s service principal, which is then used to authenticate to Azure Storage via OAuth 2.0. The storage account must be configured to allow Azure AD authentication (disable anonymous access and set the appropriate RBAC role, e.g., Storage Blob Data Reader). After a VM rebuild, the new VM is assigned the same user-assigned identity, and the bootstrap script can immediately request a new token without any credential 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 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.
Quick reference
Azure Blob Storage Tier Comparison
| Tier | Storage Cost | Retrieval Cost | Latency | Use Case |
|---|---|---|---|---|
| Hot | Highest | Lowest | Immediate | Active data, frequent reads |
| Cool | Lower | Higher | Immediate | Data accessed < once / month |
| Cold | Lower still | Higher | Immediate | Data accessed < once / quarter |
| Archive | Lowest | Highest + rehydration delay | Hours | Long-term compliance retention |
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: Assign a user-assigned managed identity and attach it to each VM. — Option A is correct because a user-assigned managed identity provides a secure, credential-free authentication method that persists across VM rebuilds. Unlike system-assigned managed identities, which are tied to a specific VM lifecycle and are lost when the VM is deleted, a user-assigned identity is a standalone Azure resource that can be reassigned to new VMs. This allows the bootstrap script to authenticate to Azure Blob Storage via Azure AD without storing any secrets, satisfying the security constraint.
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
1 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. Based on the exhibit, three VMs in different resource groups must use the same Azure identity, and the identity must continue working if one VM is deleted and recreated. What should you use?
easy- A.A system-assigned managed identity on each VM.
- ✓ B.A user-assigned managed identity attached to all three VMs.
- C.A service principal stored in the VM image.
- D.A shared access signature assigned to the resource group.
Why B: A user-assigned managed identity is an Azure resource that can be created independently and then assigned to multiple VMs. Because it persists as a separate resource in Azure, deleting and recreating a VM does not affect the identity; you simply reattach the same user-assigned identity to the new VM. This ensures the identity continues working across VM lifecycle changes, meeting the requirement for a shared, resilient identity.
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Last reviewed: Jun 11, 2026
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