What is the right thing to do in this situation?

Answer 1 is correct because in Germany you must pass a stopped public bus very slowly when there is a risk that passengers could step into the road. The rule of thumb is: if a bus is stopped at a stop (especially with people nearby, or if you can’t clearly see whether someone might cross), you reduce to walking speed and be ready to brake immediately.

The reason is that bus passengers, including children, may suddenly appear from in front of or behind the bus, and the bus itself blocks your view. “Walking speed” is not a fixed km/h number, but it means very slow, like you could stop instantly (roughly around 4–7 km/h). If the road situation is clearly separated so that no one can enter your lane, then you might not need walking speed, but the typical theory-exam assumption when passing a stopped bus at a stop is to slow to walking speed to protect pedestrians.

So you are not allowed to continue at the same speed. The key exam idea: stopped bus = expect pedestrians = slow to walking pace and be ready to stop.