- A
Enable Transparent Data Encryption (TDE) on the SQL Server instance using a service-managed key, then rotate to use key2 from Key Vault
TDE with customer-managed key meets the compliance requirement for data at rest encryption.
- B
Enable Azure Disk Encryption on the database VMs using key1 from the HSM-backed Key Vault
Why wrong: Disk encryption encrypts the VM disks, but does not encrypt SQL Server data files at rest for TDE compliance.
- C
Configure SQL Server to use SQL authentication and create a login for the application servers
Why wrong: Authentication does not provide encryption.
- D
Implement Always Encrypted for the sensitive columns using key2 from Key Vault
Why wrong: Always Encrypted protects specific columns, not the whole database, and TDE is required by compliance.
Quick Answer
The correct first step is to enable Transparent Data Encryption on the SQL Server instance using a service-managed key, then rotate to use key2 from Key Vault. This is required because SQL Server TDE must be initialized with a database encryption key protected by the service-managed key before you can alter it to use a customer-managed key stored in Azure Key Vault; you cannot directly apply a customer-managed key to a fresh TDE configuration. On the AZ-500 exam, this question tests your understanding of the TDE key hierarchy and the specific order of operations for bringing your own key (BYOK) to SQL Server on Azure VM, a common scenario when compliance mandates customer-managed keys for data at rest. A frequent trap is confusing Azure Disk Encryption, which encrypts the VM’s OS and data disks, with TDE, which encrypts the SQL Server data files themselves. Remember the mnemonic: “Start with service, then swap to customer” — you must first enable TDE with the default key before you can rotate to your own Key Vault key.
AZ-500 Secure compute, storage, and databases Practice Question
This AZ-500 practice question tests your understanding of secure compute, storage, and databases. 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.
You are the Azure Security Engineer for a financial services company. The company has a multi-tier application deployed on Azure Virtual Machines (VMs) in a hub-spoke network topology. The application consists of web servers, application servers, and database servers. The database servers run SQL Server on Windows Server 2022 and store sensitive financial data. Compliance requires that all data at rest be encrypted using customer-managed keys (CMK) stored in Azure Key Vault. Additionally, all network traffic between tiers must be encrypted, and the database must be accessible only from the application servers. You have the following resources: a Key Vault with an HSM-backed key (key1) for disk encryption, and a Key Vault with a software-protected key (key2) for SQL Server TDE. Current configuration: The web servers are in subnet A, application servers in subnet B, and database servers in subnet C. Network Security Groups (NSGs) allow traffic from subnet B to subnet C on TCP 1433. The database servers are not using TDE. You need to implement the required security controls. What should you do first?
Clue words in this question
Noticing these words before you look at the options changes how you read each choice.
Clue:
"first"Why it matters: Order matters here. You are being tested on which action comes before the others — not which action is generally useful.
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
Enable Transparent Data Encryption (TDE) on the SQL Server instance using a service-managed key, then rotate to use key2 from Key Vault
Option C is correct because to use customer-managed keys for SQL Server TDE, you must first enable TDE with a service-managed key, then switch to the customer-managed key stored in Key Vault. Option A is wrong because Azure Disk Encryption encrypts the OS disk, not SQL Server data files. Option B is wrong because enabling SQL authentication does not provide encryption. Option D is wrong because Always Encrypted encrypts specific columns, not the entire database.
Key principle: Count usable hosts — not total addresses — and remember that the network and broadcast addresses are not available to hosts in standard IPv4 subnets.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Enable Transparent Data Encryption (TDE) on the SQL Server instance using a service-managed key, then rotate to use key2 from Key Vault
- ✗
Enable Azure Disk Encryption on the database VMs using key1 from the HSM-backed Key Vault
- ✗
Configure SQL Server to use SQL authentication and create a login for the application servers
Why it's wrong here
Authentication does not provide encryption.
- ✗
Implement Always Encrypted for the sensitive columns using key2 from Key Vault
Why it's wrong here
Always Encrypted protects specific columns, not the whole database, and TDE is required by compliance.
Common exam traps
Common exam trap: usable hosts are not the same as total addresses
Subnetting questions often tempt you into counting all addresses. In normal IPv4 subnets, the network and broadcast addresses are not usable host addresses.
Detailed technical explanation
How to think about this question
Subnetting questions test whether you can identify the network, broadcast address, usable range, mask and correct subnet. Slow down enough to calculate the block size correctly.
KKey Concepts to Remember
- CIDR notation defines the prefix length.
- Block size helps identify subnet boundaries.
- Network and broadcast addresses are not usable hosts in normal IPv4 subnets.
- The required host count determines the smallest suitable subnet.
TExam Day Tips
- Write the block size before choosing the subnet.
- Check whether the question asks for hosts, subnets or a specific address range.
- Do not confuse /24, /25, /26 and /27 host counts.
Key takeaway
Count usable hosts — not total addresses — and remember that the network and broadcast addresses are not available to hosts in standard IPv4 subnets.
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.
Review block sizes, usable host formulas (2^n − 2), and how to find network and broadcast addresses for /24 through /30. Then practise related AZ-500 subnetting questions on CIDR, address ranges, and subnet selection.
- →
Secure compute, storage, and databases — study guide chapter
Learn the concepts, then practise the questions
- →
Secure compute, storage, and databases practice questions
Targeted practice on this topic area only
- →
All AZ-500 questions
1,000 questions across all exam domains
- →
Microsoft Azure Security Engineer Associate AZ-500 study guide
Full concept coverage aligned to exam objectives
- →
AZ-500 practice test guide
How to use practice tests most effectively before exam day
Related practice questions
Related AZ-500 practice-question pages
Use these pages to review the topic behind this question. This is how one missed question becomes focused revision.
Secure identity and access practice questions
Practise AZ-500 questions linked to Secure identity and access.
Secure compute, storage, and databases practice questions
Practise AZ-500 questions linked to Secure compute, storage, and databases.
Secure Azure using Microsoft Defender for Cloud and Microsoft Sentinel practice questions
Practise AZ-500 questions linked to Secure Azure using Microsoft Defender for Cloud and Microsoft Sentinel.
Manage identity and access practice questions
Practise AZ-500 questions linked to Manage identity and access.
Secure networking practice questions
Practise AZ-500 questions linked to Secure networking.
AZ-500 fundamentals practice questions
Practise AZ-500 questions linked to AZ-500 fundamentals.
AZ-500 scenario practice questions
Practise AZ-500 questions linked to AZ-500 scenario.
AZ-500 troubleshooting practice questions
Practise AZ-500 questions linked to AZ-500 troubleshooting.
Practice this exam
Start a free AZ-500 practice session
Short sessions build daily habit. Longer sessions build exam-day stamina. Try a timed session to simulate real conditions.
FAQ
Questions learners often ask
What does this AZ-500 question test?
Secure compute, storage, and databases — This question tests Secure compute, storage, and databases — CIDR notation defines the prefix length..
What is the correct answer to this question?
The correct answer is: Enable Transparent Data Encryption (TDE) on the SQL Server instance using a service-managed key, then rotate to use key2 from Key Vault — Option C is correct because to use customer-managed keys for SQL Server TDE, you must first enable TDE with a service-managed key, then switch to the customer-managed key stored in Key Vault. Option A is wrong because Azure Disk Encryption encrypts the OS disk, not SQL Server data files. Option B is wrong because enabling SQL authentication does not provide encryption. Option D is wrong because Always Encrypted encrypts specific columns, not the entire database.
What should I do if I get this AZ-500 question wrong?
Review block sizes, usable host formulas (2^n − 2), and how to find network and broadcast addresses for /24 through /30. Then practise related AZ-500 subnetting questions on CIDR, address ranges, and subnet selection.
Are there clue words in this question I should notice?
Yes — watch for: "first". Order matters here. You are being tested on which action comes before the others — not which action is generally useful.
What is the key concept behind this question?
CIDR notation defines the prefix length.
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 21, 2026
This AZ-500 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-500 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.