You are correct. The context of the sentence into which the correct word needed to be inserted determined the meaning. If one wasn't aware of the subtle difference in meanings, one would have inserted the wrong word.
Many of these tests have holes in them. That is why I qualified what I said about finding some way to measure intelligence.
Here's another story. In traditional IQ tests with math, logic, etc. I am 165. When I was 45, I was turned down for a job on the basis that I had the highest creative score they had seen in 30 years, and that I would be bored in three months. I was devastated.
I happened to be at a Libertarian meeting (white men in poweful positions who I constantly argued with) and the owner of the company was there. He was currently at home from Harvard where he was doing a doctorate. He had designed a test that didn't use math but pure logic. It was meant for the South African market where just pictures and minor words were used. I was given 5 hours (or more) to do the test. I did it in 90 minutes and scored 'off-the-graph."
The point is that I scored higher because I didn't have to do the advanced math in the other tests. It was a matter of lack of education - not intelligence.
So, yes, placement tests in America, will underestimate intelligence.
I failed English in my final year at school. By that time I had been published 7 or 8 years. I did not qualify for university because I had failed English.
For political leadership, we have to find a way to establish that someone has the intelligence to problem solve. No idea what tests to use or how to do it.