Smart investors saw early on that the compact disk, on which music is recorded in a digital code to be read by a laser, would soon become the most common form of recorded music, eventually replacing records and tapes altogether.

A)music, eventually replacing
B)music, and eventually replacing
C)music that eventually replaces
D)music by eventually replacing
E) music to eventually replace

[spoiler]

the first choice is the correct choice.
The second choice is incorrect, for the two parts of a compound verb must have similar verb forms. The third and fourth choices both change the meaning of the original by implying that the compact disk is but one form of recorded music that will replace records and disks, namely, the most common form. The fifth choice also changes the meaning of the orignal because the fifth choice implies that the compact disk will become the most common form of recorded music only by replacing others. But the original clearly implies that the CD will become the most common form and then replace records and tapes altogether.[/spoiler]