I too am puzzled. The first thing I would look is at the other end of this cable. Is it attached to something on the engine, or something on the transmission? That will give you a clue as to where the other end should go.
The Trans Temp Sensor is really there to tell you when you have been running too hard for too long, or when something in the transmission is failing. In other words, it is (or should be) rarely used. I broke the sensor on mine when doing other work, and the boat ran fine for the rest of the season until I could get a replacement. The wire was just dangling. So maybe someone disconnected yours when the sensor failed for some reason.