  This paper consists of two parts. In the first part we prove the fundamental
theorem of asset pricing under short sales prohibitions in continuous-time
financial models where asset prices are driven by nonnegative, locally bounded
semimartingales. A key step in this proof is an extension of a well-known
result of Ansel and Stricker. In the second part we study the hedging problem
in these models and connect it to a properly defined property of "maximality"
of contingent claims.
