The grading options under 'update quiz' seem potentially confusing, and need anyway to be adapted to accommodate CBM, hopefully in 2.0. I suggest the arrangement below, shifting 'Grading Method' to 'Attempts' and renaming it 'Final grade based on..', and combining 'Adaptive Mode' and 'Penalty Scheme' into a single multi-option switch called 'Submission & Grading'
The grading options would all allow negative marking of individual Qs except the last, adaptive mode, which would apply penalties for multiple submissions only down to a mark of zero. A new facility (apart from the addition of CBM) would be option 3 (immediate f/b), allowing a student to submit answers one by one (as with adaptive mode) to get immediate feedback, but without the option to resubmit in the light of feedback.
Any comments? I think this should cater fine for those wanting negative marking. My inclination would be to truncaate the total score on a test to a minimum of zero, though negative total scores are of course rare in any case. NB I've omitted the current combination of adaptive mode ignoring penalties set on individual Qs, though that could of course be added as an extra option 'Adaptive mode without penalties' if anyone thinks getting the answer right on the third attempt is worth the same mark as getting it right first time!