The correct answer is B) on intercardinal headings. Quadrantal error in a gyrocompass is caused by the interaction between the Earth's magnetic field and the gyrocompass. This error is greatest when the vessel is heading on an intercardinal heading (NE, SE, SW, NW), as the effect of the magnetic field is most pronounced in these directions. On north or south headings (N, S), the quadrantal error is minimized, and in high latitudes or near the equator, the effect of the Earth's magnetic field is reduced, resulting in less quadrantal error. The other options are incorrect because they do not correctly identify the heading where quadrantal error has its greatest effect on a gyrocompass.