The correct answer is : The well-known artist arrived.
"well-known" is a compound modifier and, in the sentence above, is used immediately before the noun it modifies. For that reason, it must be hyphenated.
"chocolate-covered" could be hyphenated as well, but its location in the structure is improper for that use, since it comes after the noun it modifies.
Explanation:
The Olympics take place every two years and countries compete in a variety of sports.
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