I'm not sure I accept this. Technically, "Toni Morrison's genius" could be translated to "the genius of Toni Morrison." In the latter case, Ms. Morrison's name is the object of a preposition -- i.e., a noun. True, the prepositional (actually a genitive) phrase is used as an adjective, but the name itself is still a proper nominative.
In the test question, "Toni Morrison's" is used as an adjective modifying "genius," but remains a genitive (possessive) noun.
In the sentence "My dog has fleas," is "My" an adjective or a possessive pronoun?
You ain't (gotta love the grammar!) the only one not entirely happy with the "correction"....along with several not happy with the content of the stupid question in the first place.
It is a personal pronoun, case 'possessive', used as an adjective.
Sorry; I posted the same thing later, without reading the thread. Agree completely.