Electrical – How to do about an exposed wire for landscape lighting

Lamp cord typically comes in 18/2, and 16/2 varieties. Neither of which has a grounding conductor. If the lamp...

• is intended to be used indoors
• will connect to the electrical system through a cord-and-plug attachment means
• Does not have any exposed metal parts

you should be fine using a 2 wire attachment cord. However if the lamp...

• will be used outdoors
• will be hardwired
• has exposed metal parts

then you should consider using an attachment cord with a grounding conductor, and connecting the grounding conductor to the grounding conductor in the fixture.

Assuming that it's twin and earth wiring (which it sounds like from your description), yes the earth wire in the cable is typically uninsulated once the outer sheath has been removed. It's usual to use a piece of yellow and green sleeving to slip over the earth wire to provide basic insulation.

I'd recommend that you run the outer sheath of the cable into the junction box, or you could likely run into water ingress issues in the future.

As to why it's exposed, I'd hazard a guess that it's a cost saving measure to avoid the additional insulation. Except in a fault condition, there should be no current in or potential on the earth conductor, so it doesn't need the same level of protection as the line conductors.