Both J and M can be in 4. Rule number 3 states that if J is in 1, H is in 2.
The stimulus says that H is in 2, so the necessary condition of the rule is satisfied. What happens when the necessary condition is satisfied? The rule goes away, so J is free to go in spots other than the first spot.
It sounds like you may have confused the meaning of this rule. The only two things we can conclude from rule 3 (if J is in 1, then H is in 2) are what the rule states and what the contrapositive of the rule is (if H is not in 2, then J is not in 1).
Since we know H is in 2, then it doesn't matter whether or not J is in 1, as the necessary condition of the rule has been satisfied. This is why answer (C) is correct, as both J and M can be in 4.
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