Edit the quiz, click on an Add link on the right side of the page, and select + a new question.
Open the question bank and click on the Create a new question button
Select Multiple choice and click Add
Give the question a category
Give the question a name (this will only be shown to teachers) (required field)
Fill in question text (required field)
Give the question a default mark (required field)
Enter some general question feedback
Choose whether the question has one answer only or multiple correct answers. 'One answer only' means users will only be able to select one box; 'Multiple answers allowed' means users will be able to select more than one box (if there is a specific number of correct answers, you may want to say this in the stem/lead-in sentence: 'Please select two of the following.')
Select whether you want to shuffle the question answers
Under Answers, fill in the choices If you selected multiple correct answers for the MCQ (see step 8 above), you are advised to give wrong answers negative scores, to discourage students from selecting all options (you should say that they will be penalised for wrong answers in the question stem)
For the correct answer, change Grade to be 100%. If there are multiple correct answers (see step 8 where you would need to have selected 'Multiple answers allowed'), allocate the 100% across all correct options; for example, if there are 2 correct responses allocate them 50% each. (Note: they do not need to have equal weightings)
Assign to an incorrect answer
Assign to a correct answer in a question with one correct answer
Assign to a correct answer in a question with multiple correct answers
Click Save settings
Tips for creating MCQs
Bloom's level/s of taxonomy, what the item is testing (descriptor), and distracter plausibility:
Question number x
Correct answer (key)
Learning objective
Bloom's level of taxonomy
Descriptor
What the item is testing
Distracter plausibility
A.... B.... C....
Question tips
Use a consistent style
Use clear and concise wording (can be complex but not complicated)
Make the question 'stem' either a direct question or an incomplete statement
Avoid double negatives
You may want to use a 'stimulus' prior to the question – this could include introductory text/context, an image etc.
Answer tips
Make the key (right answer) and distracters (wrong answers) approximately the same length, and use similar wording to avoid obvious standouts
Keep answers consistent in grammar and logical to the stem (question)
3, 4 or 5 options per answer? There is no set preference, but the more options the harder it is to think up a plausible 'distracter'
Avoid using 'none of the above' or 'all of the above' (especially if answers are shuffled!)
Use a logical pattern but don't always put the correct answer in the same position
Provide good feedback for all options (where relevant)
Where possible, ensure that wrong answers represent a common misconception
Open response items
Provide information to markers on full credit, partial credit and no credit
If not marking for grades, provide good feedback on likely responses
References and resources
The Centre for University Teaching ran two workshops in 2013 with invited speakers from the Australian Council for Educational Research (ACER): MacKinnon, Philip, MCQ assessment workshop 24 June 2013 Khoo, Siek Toon, Introduction to measurement concepts and assessment in education "Bloom" search results (eLearning literature and resources collection)
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Assign to an incorrect answer 
Assign to a correct answer in a question with one correct answer