The correct answers are Windows Hello for Business and FIDO2 security keys, as these are the two native passwordless authentication methods built directly into Microsoft Entra ID. Windows Hello for Business uses biometric or PIN-based credentials tied to the user’s device, while FIDO2 security keys leverage the WebAuthn standard for phishing-resistant, hardware-backed public-key cryptography—ensuring the private key never leaves the device, which eliminates password theft vectors entirely. On the AZ-500 exam, this question tests your understanding of Microsoft’s passwordless deployment options and often appears in scenarios about hybrid or cloud-only identity security; a common trap is confusing third-party solutions like Microsoft Authenticator (which is also passwordless but not always listed as “native” in the same context) or assuming SMS-based codes qualify. Remember the mnemonic “WHF and FIDO” to recall the two native choices: Windows Hello for Business and FIDO2 security keys.
AZ-500 Secure identity and access Practice Question
This AZ-500 practice question tests your understanding of secure identity and access. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. 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.
Your organization uses Microsoft Entra ID and wants to implement a secure passwordless authentication strategy. Which TWO solutions can be used natively in Microsoft Entra ID for passwordless sign-in?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
FIDO2 security keys
FIDO2 security keys are a native passwordless authentication method in Microsoft Entra ID, leveraging the WebAuthn standard to provide phishing-resistant, hardware-based credential verification. They eliminate passwords entirely by using public-key cryptography, where the private key never leaves the device, ensuring strong security against credential theft.
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.
✓
FIDO2 security keys
Why this is correct
Supported natively for passwordless sign-in.
Related concept
Read the scenario before looking for a memorised answer.
✗
Microsoft Authenticator app with OTP
Why it's wrong here
OTP requires a password; passwordless uses phone sign-in.
✗
Third-party password managers
Why it's wrong here
Password managers are not passwordless authentication.
✓
Windows Hello for Business
Why this is correct
Built-in passwordless sign-in for Windows devices.
Related concept
Read the scenario before looking for a memorised answer.
✗
Duo Security push notifications
Why it's wrong here
Third-party MFA, not native Microsoft Entra ID passwordless.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates confuse multi-factor authentication methods (like OTP or push notifications) with true passwordless authentication, which requires eliminating the password as a primary factor entirely, not just adding a second factor.
Detailed technical explanation
How to think about this question
FIDO2 security keys use the WebAuthn API and CTAP (Client to Authenticator Protocol) to perform asymmetric key generation and challenge-response authentication directly with Entra ID, with the private key stored on the key's secure element. Windows Hello for Business uses TPM (Trusted Platform Module) 2.0 to bind biometric or PIN credentials to the device, creating a key pair that is attested by the Entra ID registration service, enabling seamless passwordless sign-in on managed devices. Both methods support phishing resistance because the relying party (Entra ID) verifies the origin domain, preventing credential reuse on malicious sites.
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-500 question in full detail.
Secure identity and access — This question tests Secure identity and access — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: FIDO2 security keys — FIDO2 security keys are a native passwordless authentication method in Microsoft Entra ID, leveraging the WebAuthn standard to provide phishing-resistant, hardware-based credential verification. They eliminate passwords entirely by using public-key cryptography, where the private key never leaves the device, ensuring strong security against credential theft.
What should I do if I get this AZ-500 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.
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Question Discussion
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