1. The Answer is:

The level of the water is higher when the rock is in the boat. When the rock is in the boat, it will displace a volume of water equal to the weight of the rock. However, when the rock is placed directly in the water, it will only displace as much water equal to its volume. Since the rock weighs significantly more than water, it will displace a greater volume in the boat as compared to the bottom of the pool.