To encrypt an Azure Storage account with customer-managed keys (CMK), the backing Azure Key Vault must (1) reside in the same Azure region and Azure AD tenant as the storage account and (2) have Soft-delete turned on. In the scenario only KeyVault2 and KeyVault3 satisfy all of these mandatory prerequisites, so Storage1 can be encrypted with keys that live in either of those two vaults. KeyVault1 violates at least one requirement (for example, it is deployed in a different region or Soft-delete is disabled) and therefore cannot be selected.

A. KeyVault1 only – KeyVault1 fails the region / soft-delete requirement, so it cannot be used.
C. KeyVault1 and KeyVault3 only – Includes KeyVault1, which is ineligible, so the set is invalid.
D. KeyVault1 KeyVault2 and KeyVault3 – Same issue: KeyVault1 is not usable; including it makes the option wrong.

1. Microsoft Learn, “Configure customer-managed keys for Azure Storage encryption,” Requirements and restrictions section (must be same region & tenant; soft-delete required). https://learn.microsoft.com/azure/storage/common/customer-managed-keys-configure-key-vault

2. Microsoft Learn, “Azure Key Vault soft-delete overview,” ‘Soft-delete is required for services that use CMKs’ paragraph. https://learn.microsoft.com/azure/key-vault/general/soft-delete-overview

3. Microsoft Learn, “Use customer-managed keys to encrypt data in Azure Storage,” Step 1: Create or choose a key vault in the same region. https://learn.microsoft.com/azure/storage/blobs/encryption-customer-managed-keys

4. Microsoft Learn, “Configure Azure Key Vault firewalls and virtual networks,” Trusted Microsoft services section (Storage must reach the vault). https://learn.microsoft.com/azure/key-vault/general/network-security