Sentence Correction

Choose the sentence with properly used idiom (emphasized with boldface). Please note that a wrong answer choice may be grammatically correct.
1.The market has confidence that the firm will add back leverage to increase profits.
2.The market has confidence in the firm's ability to add back leverage to increase profits.
3.The market has confidence in the firm to add back leverage to increase profits.
4.All of the above
5. none of the above

I am a little confused with the usage of confidence in and confidence that usage. Can somebody please explain the above problem. The answer provided is 1.

What's the source for this problem?

I disagree with the answer. Number 2 is absolutely correct. The idiom is "have confidence in." The idiom in 3 is fine, but it is incorrect to follow "the firm" with "to add back."

1 would be correct if it said "The market is confident that the firm..."