Question

Type the possessive form of the word.

her sister-in-law

Answer 1

It's her sister-in-law's.
If we had to say the possessive form of passer-by it won't be passer-bys, but passers-by

Answer 2

her sister-in-law's

Step-by-step explanation:

The possessive cannot be 'sister's-in-law'; it has to be "sister-in-law's", and that is what native speakers say and write.

e.g. The house of her sister-in-law is her sister-in-law's house.