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.

Here is a good right up on the usage of 'that' after a verb. It is needed if there is confusion over whether the statement after the verb could be considered the object of the verb rather than a description.

https://web.ku.edu/~edit/that.html

In this example, the reader could be confused that the market had confidence in the firm. This is different than confidence that the firm will do something.

Great article! Thanks