It seems to me that that would be one correct answer. In English we can say "He writes a book" or "He is writing a book" or "He does write a book." This sentence seems to stand for all three of those present tenses as we understand them in English. If someone else could comment to confirm, that would clear it up for me too, but I think I am right on this one.
I assumed that livre was feminine due to the 'e' at the end. Is there another way to tell, or do you just sort of have to know?
Livre is a masculine noun, to know the gender you can see the article, determinate and indeterminate, le (m), la (f), un (m), une (f).
It takes practice, there's guidelines that help with most words, like the "e" at the end, but some things you just have to know. Its kind of like in english when you learn " i before e except after c" even though its not always true.