It means that he is curious and wants to know.
If he is a trustable person, and you feel up to it, you can admit it whether he is wrong or right. If you do like someone, and he guessed it then don't even hint that he is correct. Act normally as if he got it wrong. This has happened to me, a rumour spread, and school sucked for 2 years straight. A bit off topic, but the same mistake shouldn't happen to anyone else. In conclusion, it means he is curious.
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When a guy asks you who you like, it could indicate that he is interested in your romantic feelings or wants to gauge whether you have feelings for someone else. It could also be a way for him to express his own feelings towards you indirectly.