I don't care for the wording in this question. We have a lot of replication in our enviroment. The question says 'adding a publication' where when you add a publication the parameter @allow_initialize_from_backup needs to be set to True unless this is a peer-to-peer replication (defaults to True). No answer for this parameter to allow the subscription to initialize from backup.
From the answers provided I could see that the quesiton was intended to say 'When adding a new subsciption to a publication that has @allow_initialize_from_backup set to True...'