- A
Disable external sharing in the Microsoft 365 admin center for all workloads.
Why wrong: This would prevent any external sharing, which contradicts goal 1.
- B
Configure the SharePoint and OneDrive domain allowlist to include only the approved external domains.
This restricts sharing to only the domains in the allowlist, meeting goal 1.
- C
Configure the SharePoint and OneDrive domain blocklist to exclude all external domains except the approved ones.
Why wrong: Blocklists are used to block specific domains, not to allow only specific ones.
- D
Create a Conditional Access policy in Azure AD that requires MFA for all external users accessing your tenant.
This enforces MFA for external users, meeting goal 2.
- E
Enable B2B direct connect in the cross-tenant access settings for the approved external domains.
Why wrong: B2B direct connect is for Teams Connect shared channels and does not enforce MFA for external users.
Quick Answer
The correct answer is to configure the SharePoint and OneDrive domain allowlist and create a Conditional Access policy requiring MFA for external users. The domain allowlist restricts external sharing to only approved domains by blocking all others at the tenant level, directly meeting the first goal of controlling which external organizations can collaborate. The Conditional Access policy enforces multi-factor authentication for all external users before they can access shared resources, satisfying the second goal by adding a critical security layer. On the MD-102 exam, this scenario tests your understanding of how B2B collaboration settings in Azure AD and SharePoint admin center work together—a common trap is thinking you can enforce MFA solely through SharePoint settings, but only Conditional Access policies can require MFA for external identities. Remember the mnemonic “Allowlist for Access, CA for MFA” to keep the two distinct actions clear.
MD-102 Manage identity and compliance Practice Question
This MD-102 practice question tests your understanding of manage identity and compliance. 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 an enterprise administrator for Contoso Ltd. You need to configure Microsoft 365 tenant-wide settings for external collaboration. Which TWO actions should you take to meet the following goals: (1) allow only specific external domains to collaborate with your organization, and (2) ensure that external users are required to sign in with multi-factor authentication (MFA) before accessing shared resources?
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
Configure the SharePoint and OneDrive domain allowlist to include only the approved external domains.
Option B is correct because configuring the SharePoint and OneDrive domain allowlist restricts external sharing to only the approved external domains, meeting the first goal. Option D is correct because a Conditional Access policy in Azure AD can require MFA for all external users, satisfying the second goal by enforcing authentication requirements before access to shared resources.
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.
- ✗
Disable external sharing in the Microsoft 365 admin center for all workloads.
Why it's wrong here
This would prevent any external sharing, which contradicts goal 1.
- ✓
Configure the SharePoint and OneDrive domain allowlist to include only the approved external domains.
Why this is correct
This restricts sharing to only the domains in the allowlist, meeting goal 1.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Configure the SharePoint and OneDrive domain blocklist to exclude all external domains except the approved ones.
Why it's wrong here
Blocklists are used to block specific domains, not to allow only specific ones.
- ✓
Create a Conditional Access policy in Azure AD that requires MFA for all external users accessing your tenant.
Why this is correct
This enforces MFA for external users, meeting goal 2.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Enable B2B direct connect in the cross-tenant access settings for the approved external domains.
Why it's wrong here
B2B direct connect is for Teams Connect shared channels and does not enforce MFA for external users.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often confuse domain allowlists with blocklists, or assume that B2B direct connect settings (which manage cross-tenant access for Teams) can enforce MFA, when in fact only Conditional Access policies provide that control for external users accessing shared resources.
Detailed technical explanation
How to think about this question
The SharePoint and OneDrive domain allowlist works by evaluating the domain of the external user's email address against the list; only domains on the allowlist are permitted for sharing invitations. Conditional Access policies for external users leverage Azure AD's identity protection capabilities, evaluating MFA requirements at sign-in based on user risk, location, or device state, and can be scoped to all guest users via the 'External users' identity type. This combination ensures both domain restriction and authentication enforcement without affecting internal collaboration.
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.
What to study next
Got this wrong? Here's your next step.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
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Manage identity and compliance — study guide chapter
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Manage identity and compliance practice questions
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FAQ
Questions learners often ask
What does this MD-102 question test?
Manage identity and compliance — This question tests Manage identity and compliance — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Configure the SharePoint and OneDrive domain allowlist to include only the approved external domains. — Option B is correct because configuring the SharePoint and OneDrive domain allowlist restricts external sharing to only the approved external domains, meeting the first goal. Option D is correct because a Conditional Access policy in Azure AD can require MFA for all external users, satisfying the second goal by enforcing authentication requirements before access to shared resources.
What should I do if I get this MD-102 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
This MD-102 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 MD-102 exam.
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