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Option C is correct because the syntax of an anonymous inner class allows for only one named type after the new, and that type must be either a single interface (in which case the anonymous class implements that one interface) or a single class (in which case the anonymous class extends that one class).
Option A, B, D, and E are all incorrect because they don't follow the syntax rules described in the response for answer Option C.
Option B is correct because anonymous inner classes are no different from any other class when it comes to polymorphism. That means you are always allowed to declare a reference variable of the superclass type and have that reference variable refer to an instance of a subclass type, which in this case is an anonymous subclass of Bar. Since Bar is a subclass of Boo, it all works.
Option A is incorrect because it passes an int to the Boo constructor, and there is no matching constructor in the Boo class.
Option C is incorrect because it violates the rules of polymorphism—you cannot refer to a superclass type using a reference variable declared as the subclass type. The superclass is not guaranteed to have everything the subclass has.
Option B is correct because a method-local inner class can be abstract, although it means a subclass of the inner class must be created if the abstract class is to be used (so an abstract method-local inner class is probably not useful).
Option A is incorrect because a method-local inner class does not have to be declared final (although it is legal to do so).
C and D are incorrect because a method-local inner class cannot be made public (remember-you cannot mark any local variables as public), or static.
Option B is correct because a static nested class is not tied to an instance of the enclosing class, and thus can't access the nonstatic members of the class (just as a static method can't access nonstatic members of a class).
Option A is incorrect because static nested classes do not need (and can't use) a reference to an instance of the enclosing class.
Option C is incorrect because static nested classes can declare and define nonstatic members.
Option D is wrong because it just is. There's no rule that says an inner or nested class has to extend anything.
D is correct. It defines an anonymous inner class instance, which also means it creates an instance of that new anonymous class at the same time. The anonymous class is an implementer of the Runnable interface, so it must override the run() method of Runnable.
A is incorrect because it doesn't override the run() method, so it violates the rules of interface implementation.