Azure Reserved Instances - Practice Problems & Coding Challenges

Challenge - 5 Problems

🧠 Conceptual

intermediate

Understanding Azure Reserved Instances Billing

Which statement correctly describes how billing works for Azure Reserved Instances (RIs)?

A You pay a one-time upfront fee and get a discount on matching VM usage for the reservation term.

B You pay monthly fees and get a discount only if you use more than the reserved capacity.

C You pay nothing upfront and are billed hourly at a discounted rate regardless of usage.

D You pay a penalty fee if you use fewer VMs than reserved during the term.

💡 Hint

Think about how pre-paying helps save costs in cloud services.

Azure Reserved Instances require an upfront payment for a one- or three-year term. This prepayment grants a discount on the cost of VMs that match the reservation, regardless of actual usage.

❓ Architecture

intermediate

Applying Azure Reserved Instances to VM Scale Sets

You have a VM Scale Set with 10 identical VMs running Linux. You purchase a Reserved Instance for 5 Linux VMs in the same region. How does the reservation discount apply?

A The discount does not apply to scale sets, only to individual VMs.

B The discount applies only if you manually assign the reservation to specific VMs.

C The discount applies to all 10 VMs automatically because they are in a scale set.

D The discount applies to 5 VMs in the scale set, and the other 5 are billed at pay-as-you-go rates.

💡 Hint

Consider how reserved capacity matches VM usage.

Reserved Instances apply discounts to matching VM usage up to the number of reserved instances purchased. In this case, 5 VMs get the discount, and the rest are billed normally.

❓ security

advanced

Security Implications of Azure Reserved Instances Sharing

In an Azure Enterprise Agreement, how does sharing Reserved Instances across subscriptions affect security and access control?

A Reservations are shared automatically across subscriptions in the same billing context without changing access controls.

B Sharing reservations requires granting VM contributor rights to all subscriptions, increasing security risks.

C Reservations cannot be shared across subscriptions to maintain strict security boundaries.

D Sharing reservations disables role-based access control (RBAC) on VMs using the reservation.

💡 Hint

Think about billing scopes versus access permissions.

Azure Reserved Instances are applied at the billing scope level and shared automatically across subscriptions under the same billing account. This does not affect security or access controls on the resources themselves.

❓ service_behavior

advanced

Effect of Changing VM Size on Azure Reserved Instances

You have a Reserved Instance for a Standard_D2s_v3 VM in East US. You resize your VM to Standard_D4s_v3 in the same region. What happens to the reservation discount?

A The reservation discount applies fully to the new VM size automatically.

B The reservation discount applies partially based on instance size flexibility rules.

C The reservation discount no longer applies because the VM size changed.

D The reservation is canceled automatically when VM size changes.

💡 Hint

Consider Azure's instance size flexibility feature.

Azure Reserved Instances support instance size flexibility within the same VM family and region. The discount applies proportionally based on the size of the new VM compared to the reserved size.

✅ Best Practice

expert

Optimizing Reserved Instances for Cost Savings

You manage multiple subscriptions with varying VM usage patterns. Which strategy best optimizes cost savings using Azure Reserved Instances?

A Purchase reservations only for the smallest VM sizes to maximize flexibility.

B Buy reservations individually per subscription to avoid sharing and simplify billing.

C Purchase reservations at the billing account level to share discounts across subscriptions and match reservations to consistent VM usage.

D Avoid reservations and rely solely on pay-as-you-go to maintain maximum agility.

💡 Hint

Think about sharing discounts and matching usage patterns.

Purchasing reservations at the billing account level allows sharing discounts across subscriptions, maximizing utilization and cost savings when VM usage is consistent.

Practice

1. What is the main benefit of using Azure Reserved Instances?

easy

A. Automatically scale virtual machines up and down

B. Save money by pre-paying for virtual machines

C. Create virtual machines without any cost

D. Backup virtual machines to Azure Storage

Solution

1. Step 1: Understand the purpose of Azure Reserved Instances

   Azure Reserved Instances allow you to pre-pay for virtual machines to get a discount compared to pay-as-you-go pricing.

2. Step 2: Compare options with this purpose

   Only Save money by pre-paying for virtual machines mentions saving money by pre-paying, which matches the main benefit.

3. Final Answer:

   Save money by pre-paying for virtual machines -> Option B

4. Quick Check:

   Reserved Instances = Pre-pay savings [OK]

Hint: Reserved Instances = pre-pay to save money [OK]

Common Mistakes:

• Confusing Reserved Instances with auto-scaling
• Thinking Reserved Instances are free
• Mixing backup features with Reserved Instances

2. Which Azure CLI command is used to purchase a Reserved Instance?

easy

A. az vm create

B. az vm start

C. az storage account create

D. az reservations reservation-order create

Solution

1. Step 1: Identify the CLI command for Reserved Instances

   The Azure CLI command to purchase Reserved Instances is under the 'az reservations' group, specifically 'reservation-order create'.

2. Step 2: Eliminate unrelated commands

   Commands like 'az vm create' create virtual machines, not reservations. 'az vm start' starts VMs, and 'az storage account create' creates storage accounts.

3. Final Answer:

   az reservations reservation-order create -> Option D

4. Quick Check:

   Purchase Reserved Instance = az reservations reservation-order create [OK]

Hint: Reservations commands start with az reservations [OK]

Common Mistakes:

• Using VM creation commands to buy reservations
• Confusing storage commands with reservations
• Trying to start VMs to create reservations

3. Given this Azure CLI command output snippet after buying a Reserved Instance:

{
  "id": "/subscriptions/123/resourceGroups/myRG/providers/Microsoft.Capacity/reservationOrders/abc123",
  "properties": {
    "term": "P1Y",
    "appliedScopeType": "Shared",
    "skuName": "Standard_D2s_v3"
  }
}

What does the "term": "P1Y" mean?

medium

A. The reservation lasts for 1 year

B. The reservation is for 1 month

C. The reservation is for 1 day

D. The reservation is permanent

Solution

1. Step 1: Interpret the term format

   The term 'P1Y' follows ISO 8601 duration format, where 'P' means period and '1Y' means 1 year.

2. Step 2: Match the term to options

   Only The reservation lasts for 1 year correctly states the reservation lasts for 1 year.

3. Final Answer:

   The reservation lasts for 1 year -> Option A

4. Quick Check:

   Term P1Y = 1 year reservation [OK]

Hint: P1Y means period of 1 year in ISO duration [OK]

Common Mistakes:

• Thinking P1Y means 1 month or 1 day
• Assuming term means permanent
• Ignoring ISO 8601 duration format

4. You tried to purchase a Reserved Instance but received an error: "Invalid scope type". What is the likely cause?

medium

A. You specified an unsupported scope type for the reservation

B. You forgot to specify the VM size

C. You used the wrong Azure CLI command

D. Your subscription has no active VMs

Solution

1. Step 1: Understand the error message

   The error 'Invalid scope type' means the scope type parameter for the reservation is not valid or supported.

2. Step 2: Analyze other options

   Missing VM size or wrong CLI command would cause different errors. Having no active VMs does not cause this error.

3. Final Answer:

   You specified an unsupported scope type for the reservation -> Option A

4. Quick Check:

   Invalid scope type error = wrong scope parameter [OK]

Hint: Check scope type parameter when 'Invalid scope type' error appears [OK]

Common Mistakes:

• Assuming missing VM size causes this error
• Using wrong CLI command without checking scope
• Thinking no active VMs cause scope errors

5. You have a steady workload running 4 Standard_D2s_v3 VMs continuously. You want to save costs using Azure Reserved Instances. Which approach is best?

hard

A. Purchase 4 Reserved Instances for different VM sizes

B. Purchase 1 three-year Reserved Instance for Standard_D2s_v3 VM

C. Purchase 4 one-year Reserved Instances for Standard_D2s_v3 VMs

D. Use pay-as-you-go pricing and scale VMs manually

Solution

1. Step 1: Match workload to reservation quantity and term

   You have 4 steady VMs of the same size. Buying 4 Reserved Instances matching the VM size and quantity saves costs.

2. Step 2: Choose appropriate term length

   One-year term is common for steady workloads. Three-year is longer commitment but not required here. Different VM sizes do not match your workload.

3. Final Answer:

   Purchase 4 one-year Reserved Instances for Standard_D2s_v3 VMs -> Option C

4. Quick Check:

   Match VM count and size with Reserved Instances [OK]

Hint: Match Reserved Instances count and size to steady VMs [OK]

Common Mistakes:

• Buying fewer Reserved Instances than VMs
• Choosing wrong VM sizes for reservations
• Ignoring steady workload benefits