According to our rules:
(6) Do not post classroom or homework problems.
You may have crossed that line with this post, but I'll help a bit anyway,
Until your post I have never encountered the phrase "README bit". You seem to under stand the three read bits so you can't mean those.
The suid bit is that 4 that is confusing you. The sgid bit would have been a 2 instead. Briefly, let's say you sign on as "fred". When you run programs, those programs have the rights the "fred" has. For example, fred can read some files but not others. But let's say that fred can run a program called /usr/bin/passwd which is owned by "root". This program is intended to change a password, so it must write to /etc/shadow. "fred" can't write to /etc/shadow, but root can. So we set suid bit on /usr/bin/passwd. Now when fred runs it, the program has the power of "root" (owner of /usr/bin/passwd), not fred. So fred can now change his password. The sgid is similiar but changes the group of the process, not the owner.