Explanation
Correct answer: B.
Choice B is the best answer. The convention being tested is punctuation use between sentences. In this choice, the period after “Bay” is used correctly to mark the boundary between one sentence (“On…Bay”) and another sentence that begins with a supplementary phrase (“Having…years”). Here, the supplementary phrase beginning with “having” modifies the subject of the second sentence, “the celebrated ship.”
Why the other choices are wrong
Choice A
Choice A is incorrect. Without a comma preceding it, the conjunction “and” can’t be used in this way to join sentences.
Choice C
Choice C is incorrect because it results in a comma splice. A comma can’t be used in this way to join two sentences.
Choice D
Choice D is incorrect because it results in a run-on sentence. The sentences (“On…Bay” and “having…years”) are fused without punctuation and/or a conjunction.