Question

The picture that hangs above the fireplace could be my favorite

Answer 1

A prepositional Phrase is a modifying phrase consisting of a preposition and its object. A preposition is a word governing, and usually preceding, a noun or pronoun and expressing a relation to another word or element in the clause, as in “the man ON the platform,” “she arrived AFTER dinner,” “what did you do it FOR ?”

Based on this we can conclude that the answer to your question would be B. above the fireplace