Tamen dou1 hen3 hao3 As I am reading the New Practical Chinese Reader

From:

Resources for learning Mandarin Chinese

And I got to the translation of Tamen dou hen hao and I was wondering something.

The translation of "Tamen dou hen hao" is: "They are both fine"

Now I dont understand what they mean with "They are both fine" in this case since in english it can mean 2 things.


They are both DOING fine, as  a response to "How are they?"
They are both fine, as in a choice between 2 things. Like would you have a coke or water?


I was wondering wether it means the 1st meaning or the 2nd or even both.
Most likely it's the first meaning.  I would give the second as 都可以 'dou1 ke3yi3' in the sense of 'both are possible'.  Dou1 actually means 'all', but obviously it can refer to two items as well.  Anyway isn't the sentence in context in the book?

It's nice to indicate the tones too when you write pinyin, it might help others identify the words.