After tax yield on muni bond on QBank question, provides, equivalent, carries, copyright

sweetgirl

I've changed the terms to avoid any copyright hoopla:

A municipal bond carries a coupon of 7% and is traded at par. To a taxpayer in the 34% tax bracket, this bond provides an equivalent taxable yield of:

A) 10.61%.

B) 7.00%.

C) 9.09%.

I chose B, as I thought muni bonds were tax exempt and figured this was a trick question (no tax levied, after tax yield equals current yield). The answer given by Schweser is A using the usual tax equivalent formula:

Coupon / (1 - T)
7 / 0.66 = 10.61

Any explanation as to why a muni trading at par has a tax equivalent yield not equal to current yield in this instance?