The “word” of 4-bits means the MSB bit will specify the sign bit and the rest 3-bits will act as magnitude .

Example: -2  can be represented

Signed magnitude representation: The MSB bit is 1 for negative sign and the 2 binary value can be represented by 010 (-2 can be represented by 1010)

Sign          binary value of 2

One’s Compliment: invert the values of signed negative values will give the one’s compliment value : 1101

Two’s Compliment : one’s compliment +1 will give the two’s compliment meaning 1101+1=1110

So in 4-bits word one bit is reserved for  sign and the remaining 3-bits will be used for the value , so the total 3-bits value can be represented is 2³= 8 values{000,001,010,011,100,101,110,111}