Seminar paper from the year 2013 in the subject Business economics - Investment and Finance, University of Hamburg, language: English, abstract: This paper work will focus on four types of derivatives and analyze their characteristics and their operation for the purpose of understanding the financial crisis in 2007-2008, the credit default swaps in the financial market will be defined. The link between credit default swaps and financial crisis will also be explored. The governments' policies in order to take control over the derivatives in financial market will be mentioned. In the conclusion part, the advantages and disadvantages of derivatives will be discussed.