We use the formula for the banking angle:
\[
\tan \theta = \frac{v^2}{r g} + \mu
\]
Substituting the values \( v = 5 \, \text{m/s}, r = 10 \, \text{m}, g = 10 \, \text{m/s}^2, \mu = 0.5 \):
\[
\tan \theta = \frac{25}{100} + 0.5 = 0.75
\]
Taking the inverse tangent:
\[
\theta = \tan^{-1}(0.75) \approx \tan^{-1}\left( \frac{1}{2} \right)
\]
Hence, the correct answer is \( \tan^{-1} \left( \frac{1}{2} \right) \).