Theoretically, when we throw the rock overboard and it sinks to the bottom of the lake, the level of water in the lake should rise as the stone displaces that amount of water from the lake.
But the lake is a huge body of water. So practically, the rock wouldn't cause any rise in the level of water.
The level decreases if rock is denser than water because it displaces less water when it is truly submerged since its weight in water is greater than its volume in rock.
When you drop a stone into a lake, the water level rises in proportion to the stone's volume. However, when you take the stone off the boat, the water level falls by a volume of water equal to the stone's weight.
(Typically, a given volume of rock weighs three to five times more than a comparable volume of water.) The lake's water level is lower when the rock is in the water because it moves more water when it is in the boat than when it is in the water.
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