floating point numbers - closest number to 1.7

I'm preparing for some exams and one of the questions given in the past is to find the closest number to 1.7 given an imaginary floating point format that has a total of 8 bits (1 for sign, 3 for exponent, 4 for significand).

Anyway I put down 1.1011 since I can play with four significand digits and the 1 is implied by the IEEE standard. However, setting the exponent to 000 would make it a denormalised number. Does this mean the value 1.7 would be 1.1100 in floating point?

thx