The correct option is
B Asexual reproduction
A. Sexual reproduction in sponges occurs by the fusion of sperm and ova. Sponges are hermaphrodite.
B. Asexual reproduction in sponges occurs by budding or gemmules. Gemmules are the asexual reproductive bodies which are formed by endogenous budding in all freshwater and some marine sponges.
C. Digestion in sponges occur in trophocytes. These cells are also called as nurse cells.
D. Water current in sponges is developed by means of choanocytes or collar cells.
Hence, gemmules take part in asexual reproduction.
So, the correct answer is 'Asexual reproduction'.