If you go to www.hotmail.com or www.hotmail.co.uk depending on your account, and then look where it say's "Forgot Your Password" and click on that it.
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This will take you to the page to reset your password. You then fill in your email address (or someone elses if your a hacker) then type in the security code (That is shown below) then press "Continue".
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This will then take you to another screen. There are two screens you could be presented with, usually the first one if you have a secret question to answer, or as underneath, the second screen which is if you are restting your password by email.
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Finally you will be presented with a screen as shown below. This is where you choose your country and then the answer to your secret question.
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As you will see above, answering your secret question could be quite easy for someone that knows you. They could even find out the answer by chatting to you online without you even realising it.