Anyone know what this wire is supposed to be attached to?

Broken wire that’s mounted on the top of the transom

Yes that's the ground bonding wire from it to transom plate

pic

Thank you for the response. I will have to climb back there again and hook that up.

If your boat doesn't sit in the water then there is no need for it, otherwise say need to reconnect. Can use a Merc stainless cable or other wire if needed

BTW, it is for grounding purposes for Mercathode system.

Not to hijack, but I've been having a problem with chalky, very difficult to scratch off deposits on my props. Is it plausible to think I might have a similar broken/disconnected ground wire on one of my drives somewhere?

Many remove the bonding wires off the drive because they get in the way during annual drive work. All should be there but if all are there it still may not stop it. IMO, if the mercathode is working correctly it will still happen. Only way to know if its working correctly is to use a silver or platinum coated probe and measure the current after boat has been sitting in the water for couple days.

Voltages should be

Fresh Water Areas -
620 - 1180 Millivolts with Digital Meter
Salt, Polluted or Mineral Laden Water Areas:
750 - 1180 Millivolts with Digital Meter

The closer you get the Mercathode to where it should be the better. Its calcium deposits on the props

Appreciate that - it drives me crazy.