Select the option that can replace the highlighted part of the sentence grammatically and contextually correctly. If no replacement is required, select “No Replacement”. She is believing that he will return soon.

The correct option to replace the highlighted part of the sentence is "believes".

Step-by-Step Explanation:

1. Analyze the original sentence: "She is believing that he will return soon."
The verb used in the continuous form is "believing" (present continuous: "is believing").

2. Understand Stative Verbs:
In English grammar, certain verbs represent a state, belief, opinion, or mental process rather than a physical action. These are called stative verbs (or non-progressive verbs). Examples include: believe, know, think, understand, love, hate, want, and remember.

3. Apply the Grammatical Rule:
Stative verbs are generally not used in the continuous/progressive tenses (i.e., we do not use them with "-ing" forms to describe an ongoing state). Instead, they are expressed in the simple present tense or simple past tense to represent a current or past state of mind.

4. Identify the Correct Form:
Since "believe" is a stative verb expressing a opinion or belief, "is believing" is grammatically incorrect. To correct the sentence, we must use the simple present tense form. Since the subject "She" is singular, the verb must also be singular: "believes".

5. Formulate the corrected sentence:
"She believes that he will return soon."
This is grammatically correct and contextually fits the intended meaning perfectly.