being noticed does not always mean you are famous
The last sentence of this passage implies the message by calling the badge a "disgrace." Therefore, the dog could not have been cleverer than he was given credit for. Furthermore, it proves the old dog did indeed understand the true meaning of the bell. The author states outright that the bell was to warn others.
B the old dog did not understand why the master had put a bell on the dog
C the dog was cleverer than he was given credit for
D the master put the bell around the dog's neck so if he got lost he would be returned