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Many instructors prefer this method of grading to dissuade students from flippantly answering a question without giving it proper consideration, or outright guessing. However, we realize how frustrating it can be to be honestly working through a problem and find that each time you re-try a question a negative score builds up. In these cases, we highly recommend attending office hours, or seeking a study group to help check each other's work, in order to give each attempt the best possible chance of being correct.
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For example: A multiple choice question worth 10 points has 5 options, you will have 4 attempts to get the correct answer with the following possible grade outcomes based on the selected penalization method:
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