Looks to me like PCY is right.
Assume:
Density of water is 1 kg/L (at 4 degrees C))
Density of ice is about 0.920kg/L
Density of air is about 0.001kg/L
Density of iron is about 7.8 kg/L
I apologize ahead of time for the metric units.
First case:
If we freeze 1000kg of water, we will have a block of ice 1000kg/0.920kg/L = 1087L in volume (rounded).
Now lets place that block of ice into a 10,000L tank of water at 4 degrees C.
In order for the ice cube to float, it needs to displace 1000 kg of water, which also happens to be 1000L.
The tank has markings on its side to indicate water level, in L.
Now the water level on the tank will read 11,000L (10,000L plus 1000L displaced by the ice). The cube of ice is floating with 87L of its volume above the water. (1087L ? 1000L)
When the ice cube melts, its 1087L volume is reduced back to 1000L {(1087L x 0.920kg/L)/1kg/L}, which happens to be the same volume it displaced to float, so the water level remains unchanged.
Third case (ice with air bubbles):
We?ll assume we still have that 1087L block of ice, but 20% of its interior volume has been removed and replaced with air. The block will now weigh:
(0.8 x 1087L x 0.920 kg/L) + (0.2 x 1087L x 0.001 kg/L) = 800 kg (rounded).
It has a density of 800kg/1.087m^3 = 0.736kg/L (rounded)
Now when we place it in the tank it will have to displace 800kg of water, or 800L to float. The tank will now have a water level of 10,800L.
When the ice melts, its 1087L volume is reduced back to 800L {(1087L x 0.736kg/L)/1kg/L} , which happens to be the same volume it displaced to float, so that water level remains the same at 10800L.
Second case (ice and iron)
To keep our ice/iron cube floating its density needs to be the same or less than that of water. With X as our ice fraction and Y as the iron fraction,
0.92kg/L (X) + 7.8kg/L (Y) < = 1.0 kg/L
and
X + Y = 1.0
So Y = 0.01163
X = .988372
So with a 1087L block we?ll have 1074L of ice and 12.64L of iron.
It will have a mass of: 1074L x .920kg/L + 12.64L x 7.8kg/L = 1087 kg
It is just barely floating, having exactly displaced its own mass in water. The level on the tank will be 11087L.
When the ice melts we?ll have 988L of water {(1074L x 0.920kg/L)/1kg/L} and 12.64L of iron, so the level is 10000 + 988 + 12.64 = 11001L (rounded), so the level drops.