Mulitple wordpress sites on one domain

Is it possible to build multiple wordpress sites on one domain?

If i owned a URL called http://www.mywebsite.com, could I create a folder in the root directory called website1 and install wordpress to http://www.mywebsite.com/website1 and build a site there. Then make another folder e.g website2 and install wordpress at http://www.mywebsite.com/website2 and build a different site there?

I don’t want to just give it a try because I am hosting a lot of eflyers at my url and I am worried that if install wordpress in a folder at the URL, wordpress will install across the whole site and everything else will disappear.

Thanks in advance