What is the right course of action?

Your answer is correct because of the following reasons according to German traffic rules:

The "Yield" sign (inverted triangle with red border) means you must give way to other vehicles on the main road.

In this situation, the motorcycle is on the main road and therefore has priority. You must allow the motorcycle to pass first (option 1).

The bus is coming from the right on the secondary road and must yield to you as indicated by the yield sign. This means you have priority before the bus (option 2).

So the correct course of action is to let the motorcycle pass, then proceed before the bus.

Remember: The yield sign always means you must give way to traffic on the road you want to enter or cross. Traffic coming from the right usually has priority if there are no other signs, but yield signs override this rule.