Concept:
A square matrix \(U\) is called unitary if
\[
U^{*}U=UU^{*}=I,
\]
where \(U^{*}\) denotes the conjugate transpose of \(U\).
A fundamental property of unitary matrices is that every eigenvalue has modulus equal to one.
If \(\lambda\) is an eigenvalue of \(U\), then
\[
|\lambda|=1.
\]
Hence all eigenvalues lie on the unit circle in the complex plane.
Step 1: Write the defining property of a unitary matrix.
For a unitary matrix \(U\),
\[
U^{*}U=I.
\]
This means the matrix preserves lengths and angles.
Step 2: Assume \(\lambda\) is an eigenvalue.
Let
\[
Ux=\lambda x,
\]
where
\[
x\neq0.
\]
Taking norms on both sides,
\[
\|Ux\|=\|\lambda x\|.
\]
Step 3: Use the norm preserving property.
Since \(U\) is unitary,
\[
\|Ux\|=\|x\|.
\]
Therefore,
\[
|\lambda|\,\|x\|=\|x\|.
\]
Since \(x\neq0\),
\[
|\lambda|=1.
\]
Step 4: Interpret geometrically.
All complex numbers satisfying
\[
|\lambda|=1
\]
are located on the circle
\[
x^{2}+y^{2}=1
\]
in the Argand plane.
This is the unit circle centered at the origin.
Step 5: Choose the correct option.
Therefore every eigenvalue of a unitary matrix lies on
\[
\boxed{\text{Unit Circle}}
\]
and hence option (C) is correct.