More Apple coverage

Over the weekend, Apple's stock price fell from nearly $700 a share to less than $100 a share. But don't worry, Apple fans, the price drop could be a good thing for the iPhone maker's value.

The nominal decline was the result of a 7-for-1 stock split the company announced in April. Although the stock appeared Monday to have dropped 86 percent, that didn't affect the company's overall market value or the value of the Apple stock in any shareholder's portfolio. In fact, investors Monday rewarded the split by pushing up share prices.

For those confused by the split, here are some answers to their questions:

What is a stock split? It's when a company issues a certain number of shares for each one already in circulation, causing the new shares to be worth a fraction of what they were worth previously. Splits typically are 2-for-1 or 3-for-1.

In a 2-for-1 split, the stock's new per-share price would be half of what it was previously and the company would have twice as many shares in circulation. Apple executed a 7-for-1 split, so the per-share price of its stock is now one-seventh the previous price.

Apple awarded extra shares to investors who owned the company's stock as of June 2. The split-adjusted shares began trading Monday.

According to Yahoo Finance, Apple now has more than 6 billion shares of stock outstanding, up from about 860 million shares before the split.

Why do companies split their stock? They typically do stock splits to make their shares more affordable to individual investors. Also, they think mom-and-pop investors will be more likely to buy 10 shares of a stock at $50 than one share at $500. Because individual investors have limited amounts of money to invest, the argument goes, they most likely wouldn't want to commit so much to a few shares of one stock.

By attracting more individual investors -- and thereby increasing demand for their shares -- companies can potentially boost their stock price.

But stock splits have fallen out of fashion. Among companies in the Standard & Poor's 500 index, there have been just 57 splits since 2009, compared with about 375 splits from 1997 to 2000.

Has Apple ever split its stock before? Yes. Apple split its stock three times previously -- in 1987, 2000 and 2005. Each of the splits was a 2-for-1 exchange that followed a big run-up in Apple's share price.

Why is Apple splitting its stock now? Since its last split nine years ago, Apple appeared to be following the lead of Google and allowing its price to fluctuate without any attempts to manipulate it through a split.

But the company's leadership appears to have had a change of heart. When announcing the split in April, CEO Tim Cook said it would make Apple's shares "more accessible to a larger number of investors."

Of course, until about two years ago, Apple didn't have to worry much about making its shares seem more attractive. Thanks to soaring sales and profits, the company's stock had been climbing steadily for three years and were up a massive 5,400 percent since 2003.

Apple in 2014, by contrast, is in a different place. With sales and earnings growth slowing to a crawl, its stock price plunged for real last summer. Although Apple's shares have since rebounded, they have yet to return to their record highs set in 2012.

How will the split affect Apple's stock? It's unclear, but it might help boost the price by getting the company into the Dow Jones industrial average.

As one of the most valuable companies in America and a representative of one of the most important business sectors, Apple would seem to be a prime candidate to join the Dow. But it's probably been kept out of the widely watched stock index because of its stock price.

The price of the Dow index is determined by the per-share price of its 30 underlying stocks, not the market value of the constituent companies. With a share price more than three times larger than the highest priced stock in the Dow -- Visa -- Apple would have immediately become an outsize component of the index. With a smaller per-share price, it's an easier fit.

If it joined the Dow, Apple could see its stock rise, thanks to the publicity surrounding the index. Meanwhile, the various mutual funds that track the Dow would be compelled to buy shares of Apple.

"From the point of view of finance, (the split) is cosmetic," said Scott Rothbort, a professor of finance at Seton Hall University. "But from a behavioral point of view, there are certain benefits."

The Associated Press contributed to this report. Contact Troy Wolverton at 408-840-4285. Follow him at Twitter.com/troywolv.