The answer is federated identity, because this model allows authentication against on-premises Active Directory without synchronizing passwords to Microsoft Entra ID. Instead of sending password hashes to the cloud, federated identity establishes a trust relationship between your on-premises identity provider—typically AD FS—and Entra ID, using protocols like SAML 2.0 or WS-Federation. On the MS-102 exam, this concept tests your understanding of how to meet security or compliance requirements that mandate passwords never leave the local environment. A common trap is confusing federated identity with password hash synchronization, which does sync hashes to Azure AD, or with pass-through authentication, which still validates passwords locally but requires an agent and does not use federation protocols. Remember the key distinction: federation means the cloud trusts your on-premises system to authenticate, so passwords stay put. A helpful memory tip is “Federation = Foreign handshake,” where Entra ID trusts your local identity provider to verify the user without ever seeing the password itself.
MS-102 Deploy and manage a Microsoft 365 tenant Practice Question
This MS-102 practice question tests your understanding of deploy and manage a microsoft 365 tenant. 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.
An organization wants to authenticate users using their on-premises Active Directory without synchronizing passwords to Microsoft Entra ID. Which identity model should they choose?
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Federated identity
Federated identity allows users to authenticate against on-premises Active Directory using protocols such as WS-Federation, SAML 2.0, or AD FS, without synchronizing password hashes to Microsoft Entra ID. This model relies on a trust relationship between the on-premises identity provider and Entra ID, ensuring passwords never leave the local environment.
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.
✓
Federated identity
Why this is correct
Federated identity uses on-premises authentication (e.g., AD FS) and does not require password synchronization to the cloud.
Related concept
Read the scenario before looking for a memorised answer.
✗
Synchronized identity
Why it's wrong here
Synchronized identity syncs password hashes to the cloud, which does not meet the requirement to avoid password sync.
✗
Cloud-only identity
Why it's wrong here
Cloud-only identity does not involve on-premises Active Directory at all.
✗
Microsoft-managed identity
Why it's wrong here
Microsoft-managed identity is not a standard identity model for Microsoft Entra ID; it is a term used for Azure resources.
Common exam traps
Common exam trap: answer the scenario, not the keyword
Microsoft often tests the distinction between 'synchronized' and 'federated' identity, where candidates mistakenly think pass-through authentication (which still syncs user objects) qualifies as 'without synchronizing passwords'.
Detailed technical explanation
How to think about this question
In a federated setup, Entra ID issues a redirect to the on-premises AD FS (or third-party IdP) during sign-in, which authenticates the user and returns a SAML token. This token contains claims that Entra ID validates against the federation trust, enabling seamless access without password replication. A real-world scenario is a highly regulated organization that must keep passwords on-premises due to compliance policies like GDPR or HIPAA.
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 MS-102 question in full detail.
Deploy and manage a Microsoft 365 tenant — This question tests Deploy and manage a Microsoft 365 tenant — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Federated identity — Federated identity allows users to authenticate against on-premises Active Directory using protocols such as WS-Federation, SAML 2.0, or AD FS, without synchronizing password hashes to Microsoft Entra ID. This model relies on a trust relationship between the on-premises identity provider and Entra ID, ensuring passwords never leave the local environment.
What should I do if I get this MS-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.
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Question Discussion
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