I guessed wrongly that because it makes no sense to do a backup within a transactiobn, then the transaction would be ignored and it would work.
I'm not sure what the question was supposed to teach us though - would anybody really try doing a backup inside a transaction?!
Woo hoo, I finally got one right.
Believe it or not, a simple Google search reveals people did try to run a backup within a transaction:
What were they thinking?