The answer is (b); the water level in the pond will go down, as seen in the photograph at the right below. The original photograph with the rock in the boat is shown at the left for comparison.
Many middle school students are able to cite the relevant "laws of buoyancy:"
However, many of those same students have never been taught exactly what "displacement" means. Note that if you push the boat down into the water, it displaces more water, and the water level in the tank (or pond) must rise.
When the rock is in the boat, it is floating, so it displaces its weight in water - a large amount of water. However, after it has sunk to the bottom of the pond, it displaces its volume in water - much less water, because the lead weight (or a rock) is much more dense than water.
