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I think this question is poor and not helpful.
This sounds right also "The market has confidence in the firm's ability to add back leverage to increase profits."
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All A, B and C are grammatically correct, but A is concise.
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Official Solution:

Choose the sentence with properly used idiom (emphasized with boldface). Please note that a wrong answer choice may be grammatically correct.

A. The market has confidence that the firm will add back leverage to increase profits.
B. The market has confidence in the firm's ability to add back leverage to increase profits.
C. The market has confidence in the firm to add back leverage to increase profits.
D. All of the above
E. None of the above


B is no more unidiomatic than is A. Several corpra show this to be the case.
Answer: A
Answer be is
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Usage of 'that' after a verb 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. 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.
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IMO the answer should be B.
The market has confidence in the firm's ability makes more sense.
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I think this is a poor-quality question and the explanation isn't clear enough, please elaborate. With close call among choices, GMAT Club should provide elaborate explanation.... This critical componant is missing here... Thanks
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All of above looks correct answer to me
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A. The market has confidence that the firm will add back leverage to increase profits.

B. The market has confidence in the firm's ability to add back leverage to increase profits.

The difference between a and b (according to me) is that:

a) Market has confidence that the firm will do something. That means the market has confidence that firm will take some action to do something in order to achieve something.

b) Market has confidence in firm's ability to do something.

Without the original meaning, it is difficult to understand what is the real meaning that the sentence is trying to convey.

According to me both a and b are correct.

Here's a link about the usage of ability: https://magoosh.com/gmat/2012/verbs-tha ... -the-gmat/



C. The market has confidence in the firm to add back leverage to increase profits.
This is a non-sensical construction. It is neither grammatically nor logically correct.


Hey mike. Please give your analysis for this question especially the first two statements.


Thanks
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according to me b is correct ! Gmat club should provide further explanation.
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Usage of 'that' after a verb 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. 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.
Confidence is a noun in the sentence
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I got it wrong the first time and then I realized why B isn't the correct answer.
It's a meaning issue.

What are we trying to say here?
Are we confident in firm's ability? or we are confident that firm will take an action.

A firm can be capable of doing something, but mentioning that is pointless. The sentence is not trying to say that.
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Bunuel
Choose the sentence with properly used idiom (emphasized with boldface). Please note that a wrong answer choice may be grammatically correct.

A. The market has confidence that the firm will add back leverage to increase profits.
B. The market has confidence in the firm's ability to add back leverage to increase profits.
C. The market has confidence in the firm to add back leverage to increase profits.
D. All of the above
E. None of the above


Please explain why A is correct and why B is incorrect.
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Bunuel
Choose the sentence with properly used idiom (emphasized with boldface). Please note that a wrong answer choice may be grammatically correct.

A. The market has confidence that the firm will add back leverage to increase profits.
B. The market has confidence in the firm's ability to add back leverage to increase profits.
C. The market has confidence in the firm to add back leverage to increase profits.
D. All of the above
E. None of the above


Please explain why A is correct and why B is incorrect.


Stop for a moment and break down what B is saying.

[1] I have confidence that you will understand this question.
[2] I have confidence in your ability to understand this question.


[1] implies that I'm expecting you to understand this question.
[2] says that I'm confident in your ability, but it does not say whether you will do something or not.

Is the market believing in the firm? or does the market believe that the firm will do something?
Try to match what the message is trying to convey.
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I think this is a high-quality question and I agree with explanation.
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This is a poor-quality question that fails to teach either proper idiomatic usage or correct grammar - not only are two options grammatically correct, there is no idiomatic reason to pick A over B. One could make the argument that A is more appropriate on the basis of meaning, or even aesthetic (A is shorter) - however these are not dealbreakers in the strictest sense when it comes to sentence correction. Even when sentence length IS a deal-breaker, the wrong option is almost always awkwardly worded and unnecessarily elaborate. There is nothing awkward about option B.
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This is a poor-quality question that fails to teach either proper idiomatic usage or correct grammar - not only are two options grammatically correct, there is no idiomatic reason to pick A over B. One could make the argument that A is more appropriate on the basis of meaning, or even the aesthetic (A is shorter) - however these are not dealbreakers in the strictest sense when it comes to sentence correction. Even when sentence length IS a deal-breaker, the wrong option is almost always awkwardly worded and unnecessarily elaborate. There is nothing awkward about option B.

I disagree.

500 and 600 level questions simply test whether you know an idiom or not.
But, 700 level questions focus more on subtle meaning differences. Most hard level questions require you to think about meaning before applying idioms. GMAT doesn't test on obscure idioms. When you see one, it's most likely testing meaning.
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I think this is a poor-quality question. The most correct answer would be third one, that is 'confidence in the firm'. Because we always say I have confidence in him. Confidence is usually followed by in.
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