The correct answer is D) near the horizon. The error in a sextant altitude caused by refraction is greatest when the celestial body is near the horizon. This is because the light from the celestial body has to pass through a greater thickness of the Earth's atmosphere when it is near the horizon, leading to more significant refraction and a larger error in the observed altitude. The other answer choices are incorrect because: A) At or near transit, the celestial body is high in the sky, so the light passes through less of the Earth's atmosphere, resulting in less refraction. B) When the celestial body is high in the sky, the light passes through a smaller thickness of the atmosphere, leading to less refraction error. C) As the celestial body is rising, the refraction error is still relatively small compared to when it is near the horizon.